The Restructure II loan program is designed to help farmers who remain in good credit standing with their local agricultural lender, but are having trouble with cash flow due to adverse events. Only debt of an agricultural nature is eligible for refinancing.
The farmer will work through their local lender. If the lender agrees to make a mortgage loan to the applicant, the lender and the applicant will jointly complete an application for an RFA participation. Participation is restricted to loans that do not exceed 80 percent of the appraised value of real estate comprising the collateral. Borrower net worth must not exceed $2,082,000 in 2023 (indexed annually for inflation; please call RFA for current limitation), including the assets and liabilities of their spouse and dependents.
The RFA will participate on 45 percent of a qualifying loan up to a maximum of $525,000. The agricultural lender will retain the balance of the loan. Participating lenders are allowed to charge either a fixed or adjustable rate. The interest rate on the RFA portion of the loan is fixed. Call the RFA for the current rate.
The participation term may be up to a maximum of 10 years. Collateral for the loan must include a first mortgage on farm real estate. Terms of the loan will be determined by the type of debt being restructured. The loan may have a balloon.
There will be a $50.00 non-refundable application fee on all loans. The lender may collect normal closing costs.
An applicant must meet the following requirements:
- Be a resident of Minnesota, a Minnesota domestic family farm corporation, or family farm partnership.
- Be the principal operator of the farm.
- Not be a current or previous participant in an RFA farm debt reorganization program.
- Have a total net worth that does not exceed $2,082,000 (indexed for inflation).
- Have received 50 percent of their gross income from farming over the past three years.
- Have expenses that do not exceed 95 percent of income.
- Meet with local SWCD official.