Which Program is right for you?
Beginning Farmer Loan Program-BFLP vs. Loan Participation Program-LPP
Two IADA loan programs available to Iowa farmers are the Beginning Farmer loan Program and the Loan Participation Program. These programs may be used independently or in conjunction with one another. Both loan programs can only be used for new purchases and neither program can be used to refinance existing debt.
Comparison of IADA Loan Programs
| Beginning Farmer Loan Program – BFLP | Loan Participation Program - LPP |
|
|---|---|---|
| Age | At least 18 years old No upper age limit |
At least 18 years old No upper age limit |
| Eligible projects | Breeding livestock, machinery, land, farm improvements | Breeding livestock, machinery, land, farm improvements |
| Lender’s Certification | None | Certify that no other private or state credit can be obtained; FSA does not need to certify denial |
| Land ownership | Cannot own substantial farmland (30% of county median acres) |
No restrictions |
| Buy from close relatives | Yes | Yes |
| Minimum loan | None | None |
| Maximum loan | $501,100 – Federal Bond $500,000—State Bond |
30% purchase price or $150,000 participation loan |
| Maximum net worth | $691,172 | $400,000 |
| Maximum debt before closing | N/A | $400,000 |
| Application fee | $50 | $100 |
| Closing fee | 1.50% of IADA Bond to $250,000 0.75% of the Bond over $250,000 $300 minimum |
1.25% of IADA participation loan $300 minimum |
| Current ratio | N/A | Greater than 1.1 |
| Debt to asset ratio | N/A | Cannot exceed 80% without guaranteed source of repayment |
| Loan to net worth ratio | N/A | Cannot exceed 300% without guaranteed source of repayment |
| Off-farm income | No restrictions | Cannot exceed 50% of projected total of gross income |
| Corporation, Partnerships, LLC’s eligibility | No | Yes |
A beginning farmer can participate in both of these programs at the same time as long as the applicant and project meet both programs’ guidelines.
Beginning Farmer Tax Credit Program
Maybe you’re not in the market to purchase farm property or equipment, but still qualify as a beginning farmer. The IADA also has the Beginning Farmer Tax Credit Program. This program was designed to help beginning farmers secure leased farm land or equipment by offering the asset owner an Iowa State Tax Credit. See the BFTC section for more information.