Beginning Farmer Loan Program
The Iowa Finance Authority manages a beginning farmer loan program that provides financing to new farmers at reduced interest rates. Loans are financed by participating lenders with the issuance of federal tax-exempt bonds by the Iowa Finance Authority; contract sellers also receive a state tax exemption on the interest income.
Loans can be used to purchase farmland, machinery and equipment, breeding livestock and buildings. it can also be used to improve existing buildings or farmland.
Beginning farmer loans can be used for contract sales, however, there are some limitations for certain family members. Contract sales are permitted between related parties but not closely related parties such as parents, grandparents or siblings. These transactions are permitted through a third-party lender.
Beginning Farmer Loans are often used with the USDA Farm Service Agency (FSA) Direct Farm Ownership Down Payment Loan Program.
Maximum loan amounts are determined by loan purpose as follows.
- Land: $667,500
- Farm improvements and new depreciable property: $250,000.
- Used depreciable property: $62,500.
Eligibility
- Applicants must be a resident of Iowa and 18 years of age at the time of application.
- Have a net worth of no more than $820,000.
- Have sufficient education, training or experience for the anticipated farm operations.
- Have access to adequate working capital, equipment, and other items that are necessary to operate the farm.
- Be the owner/operator.
- Own no more land than 30% of the county median acres.
Application Process
The application can be accessed on the Iowa Finance Authority website. Loan terms including interest rate, length of loan, prepayment options, service fees and repayment schedule are negotiated with lender or seller. See Beginning Farmer Loan Program for more information.
Loan Participation Program (LPP)
Iowa Finance Authority also manages a loan participation program that assists low-income farmers in obtaining loans and making down payments. Loan proceeds can be used for land, machinery, equipment, breeding livestock or farm improvements. Funding is available for up to 30% of the project cost, up to $200,000.
Beginning Farmer Tax Credit Programs (BFTC)
Iowa Finance Authority also manages a beginning farmer tax credit program. The purpose of the program is to provide an incentive for farm assets owners to lease to a beginning farmer. The person who leases the asset (land, equipment, breeding livestock) to a beginning farmer receives a tax credit to reduce their state of Iowa income taxes.
All tax credit applications must be submitted by August 1 to be considered for that tax year.