Eligibility for Disaster Recovery Loans is established through state or federal disaster declarations. For a current list of counties eligible for funding due to drought conditions and other severe weather events, visit the USDA website. Applicants have one year from a disaster declaration date to apply for a loan.
Additionally, on April 12, 2023, the Rural Finance Authority Board declared an emergency for all 87 counties in the State of Minnesota due to extreme winter weather, retroactive to January 1, 2023. By declaring this agricultural emergency, Minnesota farmers can utilize the RFA Disaster Recovery Loan Program to clean up, repair, or replace farm structures and replace livestock that may have been destroyed due to high winds and the weight of snow, sleet, and ice in January, February, and March of 2023. This resolution shall remain open for loan applications until April 12, 2024.
You will work through your local lender to apply for the Disaster Recovery Loan. This will be a 55%/45% participation, which means the bank will finance 55% of the loan and the RFA will finance the remaining 45% at 0%. Upon the farmer's completion of an application, your lender will apply for RFA participation. (The RFA must have a completed Master Participation Agreement with your lender on file).
Full Eligibility Requirements
The farmer candidate must meet the following criteria:
- Be a Minnesota resident or a domestic family farm corporation or family farm partnership as defined in section 500.24, subd. 2;
- Certify that the damage or loss was sustained within a county that was the subject of a state or federal disaster declaration, or due to the presence of a highly contagious animal disease, or due to an emergency determined by the RFA; or certify that the farm operations experienced a quantifiable loss of revenue due to human disease resulting in a declaration of a peacetime emergency in the state;
- Demonstrate an ability to repay the loan;
- Have received at least 25% of annual gross income from farming for the past year.
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 in order to qualify for RFA participation.
The RFA participation in a qualifying loan is limited to 45 percent of the principal amount up to a maximum of $200,000. Interest rate on the RFA portion of the loan must not exceed 4.0 percent, and is currently set at 0.0 percent. Down payment and collateral requirements will be determined by the agricultural lender and the authority. Loan amortization will be scheduled on flexible terms not to exceed 10 years. Loan payments of interest only are permitted for the first two years. There is no maximum on the size of loan that a participating lender may make under the program.
The originating lender will retain the balance of each loan. The borrower must satisfy the local lender's guidelines. The local lender will control the day-to- day operation of the loan. Participating lenders are allowed to charge a fixed or adjustable interest rate consistent with their normal lending practices and their agreement with the RFA.