Programs
Beginning Farmer Bond Program
This program provides affordable financing to farmers by using federally tax exempt bonds ("Aggie Bonds") to reduce the interest rate on a loan to purchase farmland. This program can be used between a buyer and his/her local lender or between a buyer and the seller for a contract purchase. The lender or contract seller make all credit decisions for the loan. Loans may be used to purchase capital assets including farmland, new or used farm improvements or buildings, new equipment, and used equipment when purchased with farmland. Loan proceeds may not be used to finance a residence. The maximum loan size is $470,100.
Eligibility requirements include:
- Illinois resident at least 18 years old;
- Net worth of less than $500,000;
- Borrower will be the principal user of the capital item;
- Have not owned a significant amount of farmland.
More information about the Beginning Farmer Bond Program
Farm Purchase Guarantee
The Farm Purchase Guarantee Program (FPG) is designed to enhance credit availability for farmers, ranchers, and agribusinesses to purchase farm land. Loans may be made to purchase farmland, construct or repair buildings and other facilities, and improve farmland to promote soil and water conservation. In some cases, up to 50% of the loan may be used to refinance existing debt
In conjunction with the IFA Secondary Market Loan Program, lenders are encouraged to utilize the Secondary Market Program when initiating a Farm Purchase Guarantee (FPG) loan in order to obtain more favorable financing terms for the borrower.
Eligibility requirements include:
- Illinois resident at least 18 years old;
- Principal operator of a farm who derives at least 50% of gross income from farming;
- Net worth of at least $10,000;
- Debt/asset ratio of borrower cannot exceed 70% after the project is considered;
- Cash flow and collateral must be adequate for the loan.
More information about Farm Purchase Guarantee Program
State Guarantee Program for Restructuring Agricultural Debt
This loan program allows a farmer to consolidate existing debt and spread the payments out over a longer term. Loans are made through a local lender and the lender will receive an 85% guarantee on the principal and interest of the loan. The maximum loan size is $500,000 and 30 years is the longest term available. The interest rate can be variable or fixed and must be less than the market rate of interest generally available to the borrower.
Eligibility requirements include:
- Illinois resident at least 18 years old;
- Principal Operator of a farm who derives at least 50% of gross income from farming;
- Debt/assets ratio is between 40 and 65% on a current balance sheet;
- Cash flow and collateral must be adequate for the loan.
More information on the Restructuring Program
Specialized Livestock Guarantee Program
This program is designed to provide family sized livestock operations the access to capital needed to enter, upgrade, or expand their livestock business. Local lenders receive an 85% guarantee of the principal and interest on the loan. Loan proceeds may be used for the purchase of capital assets used in livestock production. This includes construction, purchase or remodeling of livestock facilities and the purchase of equipment and/or breeding livestock. Purchases can not be made more than six months prior to IFA loan approval. The maximum loan size is $1,000,000 and maximum term is 15 years. The interest rate can be variable or fixed, and the interest rate must be less than the market rate of interest generally available to the borrower.
Eligibility requirements include:
- Borrowers or the owners of a partnership or corporation must be an Illinois resident at least 18 years old;
- Applicant must be the principal operator and materially involved in the operation;
- Debt/asset ratio of borrower generally should not exceed 70% after the project is considered unless risk reduction measures are undertaken;
- Cash flow and collateral must be adequate for the loan.
More information about the Specialized Livestock Program
Value Added Stock Purchase
These loans are made by local lenders who receive an 85% guarantee on the principal and interest of loans to Illinois farmers planning to purchase stock in value-added entities that further process their commodities. Loan proceeds are used to purchase stock in a value added entity. In conjunction with a purchase, debt may be refinanced to improve lien position or financial structure, up to the amount of the purchase. A portion of the stock can be used as collateral for this loan. The maximum loan size is $100,000 and maximum term is 10 years. The interest rate can be variable or fixed and must be less than the market rate of interest generally available to the borrower.
Eligibility requirements include:
- Borrowers, the owners of a partnership or corporations must be an Illinois resident at least 18 years old;
- Applicant must be the principal operator and materially involved in the operation;
- Debt/asset ratio of borrower generally should not exceed 70% after the project is considered unless risk reduction measures are undertaken;
- Cash flow and collateral must be adequate for the loan.
More information about Stock Purchases
Young Farmer Guarantee Program
This program allows farmers to make capital purchases that will expand or upgrade their operation. Loans are made by local lenders who receives an 85% guarantee of the principal and interest on the loan. The loan proceeds may be used for the purchase of farm related capital assets including farmland, machinery, and breeding livestock. The maximum loan size is $500,000 and maximum term is 15 years. The interest rate can be variable or fixed and must be less than the market rate of interest generally available to the borrower.
Eligibility requirements include:
- Illinois resident at least 18 years old;
- Principal operator of a farm who derives at least 50% of gross income from farming;
- Net worth of at least $10,000
- Debt/asset ratio of borrower cannot exceed 70% after the project is considered;
- Cash flow and collateral must be adequate for the loan.
More information on the Young Farmer Program
State Guarantee Program for Agri-Industries
This program is designed for farmers and agribusinesses that wish to diversify into new enterprises or to further process existing crops or livestock. Loans can be made to farmers or agribusinesses to purchase new or used property, equipment, or other capital items that will be used for one of the following purposes:
- Growth and development of new crops or livestock not customarily grown in Illinois, or
- The further processing of grain or livestock grown in the state.
Loans are made through a local lender who receives an 85% guarantee on the principal and interest of the loan. The interest rate can be variable or fixed and must be less than the market rate of interest generally available to the borrower.
Eligibility requirements include:
- Illinois resident at least 18 years old;
- Principal operator of a farm or land;
- at least 50% of gross income is from farming;
- Gross income is at least $20,000 based on previous years tax return;
- Net worth is less than $500,000;
- An agribusiness must be located in Illinois and the products used must be grown in Illinois currently or soon to be;
- Cash flow and collateral must be adequate for the loan.
More information on the Agri-Industries Program
Guaranteed Secondary Market Loan Program
IFA assists Illinois Bankers by offering a secondary market program for IFA Guaranteed Loans. Through this program the Authority allows lenders to better manage interest rate risk and increase fee income. The lender may resell the guaranteed portion of the loan to a qualified buyer of their choice, through MABSCO Capital, Inc, the fiscal and transfer agent as well as servicing agent for all IFA Guaranteed Loans. For the loan to qualify for resell to the secondary market, the eligibility requirements must be met for that specific guarantee program. The Secondary Market program allows banks to benefit from increased return on investment, increased liquidity, increased service fees, access to a broader range of rates and terms for the borrower, streamlined paperwork and reporting requirements, and up-to-date program statistics.
To learn more about our Secondary Market Program, contact an IFA Agriculture Funding Manager: agteam@il-fa.com
