The AgBMP Loan Program

  • provides low interest financing to farmers, rural landowners, and agriculture supply businesses to encourage practices or equipment that prevent or reduce pollution;
  • 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.

The Local Lender

Local lenders participating with the AgBMP Loan Program are responsible for determining if a loan is financially feasible for the individual. Most commercial lending institutions, counties, regional development commissions, drainage authorities, and other local governments with taxing authority may sign up to be local lenders.  The banker makes lending decisions, writes the loans, and collects payments from 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.

Approval Process

The borrower meets with their local county government contact to propose a project or purchase that can help maintain or improve water quality. If the borrower’s project or purchase meets state and county eligibility requirements the county may approve the project or purchase and let the borrower work with their local AgBMP cooperating bank or county lender. The local bank or county lender evaluates the financial aspects of the project or purchase. Once the project or purchase is complete, the local bank or county lender requests the funding from the MDA and the loan is drawn up between the local bank or county lender and the borrower.

AgBMP Program Flow Chart

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 to the AgBMP loan program, only those projects that are financially feasible and provide environmental benefits will be funded. The lender is responsible that all funding is repaid to he AgBMP loan program within the max 10 year term limit.

Who Is Eligible?

  • Anyone for Septic work: Private and cluster septic work are eligible projects for any location within Minnesota.
  • Water quality cooperatives as defined in Minnesota Statute 115.58, sub. 1(d). 
  • Groups or organizations established to manage a shared (cluster) septic system.
    • In a cluster system, landowners share one large central drain field, which avoids the need for landowners to replace septic systems on an individual basis.
  • 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: any 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.

Examples of Eligible Activities but not a complete list of all possibilities.

The AgBMP loan program is able to fund ANY ACTIVITY OR PRACTICE THAT HELPS TO IMPROVE WATER QUALITY, OR THAT HELPS MAINTAIN HIGH WATER QUALITY. The following shows a few examples for each category. There are more projects and practices available than listed under these categories.

Agricultural waste management projects that manage or reduce the inflow of agricultural waste into surface and groundwater systems

  • Bedding management equipment or projects
  • Buffer strips for feedlot waste runoff
  • Clean water diversions for feedlots
  • Composting structures
  • Diet management and control
  • Feedlot improvements
  • Livestock paddocks or exclusions
  • Manure handling, loading, transfer, agitation, pumping or spreading equipment
  • Manure storage structure construction, expansion or repair (liquid or solid)(new or used)
  • Manure storage abandonment
  • Milk house waste storage or treatment
  • Nutrient management plans
  • Odor control
  • Water conservation or reuse
  • Soil testing

Structural erosion control measures intended to help reduce soil erosion which adversely affects water quality

  • Buffer strips on rivers or streams with erosion issues or nutrient channeling
  • Erosion control projects
  • Sediment and water control basins
  • Seeding for buffers or areas that reduce erosion issues
  • River bank or shoreline stabilization
  • Terrace
  • Tile practices that reduce erosion issues
  • Waterways - general

Tillage equipment to assist with nutrient management or help manage erosion

  • Planting or planting-related equipment for nutrient or residue management
  • Tillage equipment for manure or nutrient management or incorporation
  • Tillage equipment that helps with residue management to help manage erosion
  • Precision agriculture technology utilized as a component of an approved practice

Any septic systems, including individual or cluster home sewage treatment systems

  • New septic systems
  • Septic system upgrades or repairs
  • Septic cluster systems
  • Connection or repair to central sewer
  • Privy and tanks
  • Septic pumping, application and hauling equipment

Other projects or practices

  • Cover crops
  • Alternative energy
  • Brownfield restoration
  • Chemical application or containment systems
  • Chemical irrigation control
  • Floodplain protection and connections
  • Irrigation management BMP
  • Marina nonpoint control practice
  • Ring dike
  • Silvicultural practice
  • Stormwater diversion
  • Timberstand improvement
  • Urban nonpoint control practice
  • Variable rate technologies
  • Well replacement, filtration or treatment equipment
  • Well sealing
  • Connection to central water
  • Wetland restoration and protection
  • Windbreaks to prevent erosion

Ineligible Activities

AgBMP loans are meant to encourage water quality protection and may only be used to solve existing water quality problems.

The following are ineligible for AgBMP Loans:

  • Tractors
  • New construction projects that do not improve existing water quality
  • Re-financing of projects that are already completed with existing lender conventional financing
  • Manure handling equipment or feedlot improvements on feedlots with more than 1,000 animal units that are not in the Mississippi watershed district. (Feedlot limits are determined by animal units, not head.)
  • Activities for any operation that has a court ordered filing brought against them to implement.  (Notices of violation do not affect a project’s eligibility.)

Loan Terms

  • Loan amounts are limited to $200,000 to any one individual or project.
  • Borrowers may have multiple outstanding loans. However, the aggregate sum of all Ag BMP loans may not exceed the $200,000 principal balance maximum.
  • Example fees include: insurance, mortgage handling, filing, default and delinquency, and yearly maintenance fees.
  • Maximum loan term length is 10 years.
  • The maximum interest rate is 3 percent plus other normal and customary charges.
  • The frequency and number of payments are flexible and are negotiated with the lender.
  • The county and local lender may set additional terms and requirements for eligibility of projects.

Comparison of Typical Interest Paid on 3% and 6% loans for 5 to 10 years.

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

Amount of Funding Available

Since 1995, a total of $76,294,195.17 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

Local Government and Lender Contacts can be found by clicking on the local contact map shown below.

Call your local county offices to learn about specific local application procedures. (If your local bank is not on the list, you may ask them to contact us to become an AgBMP lender.)

Local Contact Map