The Agroforestry Loan Program provides low-interest financing to farming during the growing period required to convert agricultural land to agroforestry.
This is a loan participation program available through the MDA’s Rural Finance Authority (RFA). Farmers will work through their local lender. After completing an application, the lender will apply for RFA participation. The RFA must have a completed Master Participation Agreement with the lender on file. The application fee is $50.
Eligibility Requirements
The farmer candidate must meet the following criteria:
- Be a resident of Minnesota or general partnership or a family farm corporation, authorized farm corporation, family farm partnership, or authorized farm partnership as defined in section 500.24, subdivision 2
- Be or plan to become a grower of short-rotation woody crops on agricultural land that is suitable for the profitable production of short-rotation woody crops
- Be a member of a producer-owned cooperative that will contract to market the short-rotation woody crop to be planted by the borrower
- Have not received assistance under this program for more than $150,000 in the producer's lifetime
- Agree to work with appropriate local, state, and federal agencies, and the marketing cooperative, to develop an acceptable establishment and maintenance plan
- Agree not to plant short-rotation woody crops within one-quarter of a mile of state or federally protected prairie
- Meet any other requirements the authority may impose by administrative procedure or by rule
- Demonstrate an ability to repay the loan
Participating Lenders
While all lending institutions are eligible to be part of the program, they are not required to do so. Their decision to join the program is voluntary.
Each lender must enter into an agreement with the RFA and offer farm loans based upon certain pre-established rules to qualify for RFA participation.
Loan Terms
The authority may participate with eligible lenders in agroforestry loans to farmers and agricultural landowners who are eligible. The authority's participation is limited to 45% or $75,000 of total accumulative principal per loan. The interest rates and repayment terms of the authority's participation interest may differ from those of the lender's retained portion of the loan. The loan may be disbursed over a period not to exceed 12 years. A borrower may receive loans, depending on the availability of funds, for planted areas up to 160 acres for up to:
- The total amount necessary for establishment of the crop
- The total amount of maintenance costs, including weed control, during the first three years
- Seventy percent of the estimated value of one year's growth of the crop for years four through 12
- Security for the loan must be the crop, a personal note executed by the borrower, and whatever other security is required by the eligible lender or the authority
