The Pilot Agricultural Microloan Program was established to assist non-traditional farmers by providing lending capital while developing their farm business towards traditional agricultural credit. Farmers can borrow up to $20,000 to be used for working capital (annual inputs such as seed, feed, fertilizer, land rent, etc.) or equipment and other farm asset purchase with a common useful life of 10 years or less. Real estate, cooperative stock, and refinance of current debts are ineligible.
To be eligible for the Pilot Agricultural Microloan Program, applicants must meet the following criteria:
- be a resident of the State of Minnesota,
- be a member of a Protected Group as defined under Minn. Stat. § 43A.02, subdiv. 33 (minority, woman, disabled) or qualified non-citizen as defined under Minn. Stat. § 256B.06, subdiv. 4, par. (b) (refugee, immigrant, asylum, etc.),
- utilizing funds towards the production and marketing of specialty crops (direct market fruits & vegetables, cut flowers and herbs, etc.) or eligible livestock, (open range poultry, sheep, goats), and
- show an ability to repay the loan.
While all lending institutions are eligible to be part of the program, they are not required to do so. Their decision to join the RFA program is voluntary.
Any lending institution, or other organizations of a non-profit or for-profit nature, that is in good standing with the State of Minnesota, has the appropriate business structure, and suitable staffing to distribute and collect loan funds, may become an Intermediary Lender with the Pilot Agricultural Microloan Program. Once they agree to join, each lender must enter into an agreement with the RFA and offer Agricultural Microloans based upon certain pre-established rules in order to qualify for RFA participation.
Interest rates and other specific terms will vary from lender to lender depending upon the conditions the loan.
Under the program currently being offered by the RFA, the maximum amount of outstanding principle with this program cannot exceed $20,000, or 70% of the farms marketable product value, whichever is less. Loan amortization can be scheduled for a term of 1 to 6 years negotiated between the lender, applicant, and the RFA. Loans may contain prepayment penalties under limited circumstances.
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 interest rates no greater than 10% APR.
A borrower may use the program more than one time to an aggregate amount of $20,000. A borrower would have to make a new application for each loan. Approval would be determined by the current guidelines in effect at the time of the application.