Borrower Information for the AgBMP Loan Program |
The AgBMP Loan Program
- provides low interest financing to farmers, rural landowners, and agriculture supply businesses to encourage practices that prevent or reduce pollution problems identified by the county in local water plans;
- helps landowners comply with water related laws or rules;
- can be used with state and federal cost share or other sources of funding; and
- has funds available in all counties.
Who is Eligible?
- Farmers
- Anyone who reports any farm income on their federal tax forms.
- Rural landowners
- Defined by the local government.
- Rural definitions can be based on administrative, land-use, or economic concepts.
- Agriculture supply businesses
- Businesses that provide materials or services to farmers.
- Service must provide primary water quality benefits.
- Examples include: custom manure applicators and variable rate technology for fertilizer application.
- Water quality cooperatives
- Groups or organizations established to manage a shared (cluster) septic system.
- In a cluster system, landowners share one large central drainfield, which avoids the need for landowners to replace septic systems on an individual basis.
What are Eligible Activities?
The AgBMP loan program has funded over 1500 different activities. The following is a list of general categories:
Any practice that improves water quality is eligible.
Click here for a list of example practices.
What are Ineligible Activities?
These loans are meant to encourage water quality protection and may only be used to solve existing water quality problems.
Most new construction projects.
- When buildings are being constructed or renovated, only those costs associated with components that have a primary function of waste collection and storage, waste containment, or pollution abatement are eligible.
- A new waste basin is eligible, while a driveway leading to it is not.
- A new feedlot is eligible, the wiring and lighting is not.
- A project may include reasonable expenses that are necessary to make the project fully functional. Which includes, fencing, design and engineering expenses, and landscaping.
- Financing projects already completed.
- Projects must first obtain approval from the local government prior to completion.
- Projects must also include only costs approved by the local government.
- Improvements for feedlots with more than 1,000 animal units.
- Activities for operations that have had court filings brought against them.
- Facilities that have active criminal enforcement proceedings related to environmental regulations are ineligible.
- Notices of violation do not affect a project’s eligibility.
Terms of Loans
- Loan amounts are limited to $100,000 to any one individual or project.
- No single borrower may have an outstanding loan balance of over $100,000.
- Maximum loan length is 10 years.
- The maximum interest rate is 3%, interest plus other normal and customary fees.
- Example fees include: coupon, insurance, mortgage handling, filing, default and delinquency, and yearly maintenance fees.
- The frequency and number of payments are flexible and are negotiated with the lender.
- The county and local banker may set additional terms and requirements for eligibility of projects.
| Years |
Loan Amount |
Total Interest Paid at 3% |
Total Interest Paid at 6% |
Cost Savings |
| 5 |
$10,000 |
$918 |
$1,870 |
$952 |
| 5 |
$25,000 |
$2,294 |
$4,675 |
$2,380 |
| 10 |
$50,000 |
$8,615 |
$17,934 |
$9,319 |
| 10 |
$100,000 |
$17,231 |
$35,868 |
$18,637 |
Who to Contact?
The program is run locally through the Soil and Water Conservation District or Environmental Office. Call your local county offices to find out their local application procedures.
Local Contact Map
What Banks are in My County?
The program has lenders available in all counties. For those landers not yet signed up with the program, please contact us about participation.
Local Contact Map
Approval Process
The borrower proposes a project to the local county. If the borrower meets state eligibility requirements and the project addresses local water quality priorities, the county may approve the project and refer it to a cooperating banker. The local banker evaluates the financial aspects of the project. With the approval of the county and the local bank, the project can be implemented. Once the project is complete, funds are sent from the MDA to the local bank and the loan is drawn up between the local bank and the borrower.
Local Decision Making
The AgBMP Loan Program allows local governments the flexibility needed to address specific local water quality concerns.
The Local Government helps the farmers, agriculture supply business and landowners identify problems and find solutions to water quality issues related to the agricultural industry or failing septic systems.
The Local Banker is responsible for assessing the economics of the proposed project and determining if a loan is financially feasible for the individual. The banker makes lending decisions, administers the loans, and collects payments from the borrowers. Because the money is a loan and must be repaid, only those projects that are financially feasible and provide environmental benefits will be funded.
Amount of Funding Available
Since 1995, a total of over $75 million has been made available through the federal Clean Water Act and the Minnesota Legislature. Please contact your local Soil and Water Conservation District or County Environmental Office if you are interested in this program.
For More Information
Potential borrowers should contact their local Soil and Water Conservation District, county environmental office, or local water planning officials for more information about loan availability in their county.
Local Contact Map
Local units of government, lenders or individuals requiring additional information should contact us at:
Agriculture Best Management Practices Loan Program
Minnesota Department of Agriculture
625 Robert Street North
Saint Paul, MN 55155-2538
(additional contact information below)
MDA Contact
AgBMP Loan Program
AgBMP.Loans@state.mn.us ~ 651-201-6618
Dwight Wilcox, Program Administrator
Dwight.Wilcox@state.mn.us ~ 651-201-6608
David L. Miller, Assistant Program Administrator
David.L.Miller@state.mn.us ~ 651-201-6609
Finance & Budget Division
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