NIFA's Beginning Farmer and Rancher Loan Program

To be eligible, the farmer or rancher must meet certain program requirements, including limitations relating to net worth and previous land ownership. You can use loans to purchase agricultural land, permanent improvements to agricultural land, equipment, machinery, and breeding livestock.

To qualify as a beginning farmer or rancher, the borrower must meet the following criteria: 

• Actively engaged in an agricultural or ranch operation or must become actively engaged in an agricultural or ranch operation upon receiving the loan.
  • The loan may not be made to a firm, partnership, or corporation.
• Have a net worth (including the net worth of the farmer's or rancher's spouse) of no more than $1,000,000 at time of application.
  • Net worth for this program is all assets, valued at their fair market value, minus all debt.
• Have not (at any time) had a direct or indirect ownership interest in “substantial farmland.”
  • "Substantial farmland" is any parcel of land greater than 30% of the median size of a farm in the county in which the parcel is located. See the list of counties here.
  • Any ownership or material participation, or financing received by the person's spouse or minor child is treated as ownership and material participation or financing received by the borrower. (Property farmed under a true lease or rental arrangement is generally not considered as "owned").
  • An individual who owned farmland that was subsequently disposed of while such individual was insolvent may, in some situations, still qualify as a first-time farmer for this program. Contact NIFA for specific requirements.
  • An individual must purchase and own the property or equipment in their individual capacity. A trust, corporation, or partnership is not an eligible ownership structure.

Note: The aggregate amount of the loans cannot exceed $649,400 (adjusted annually for inflation and deflation).

Real estate used in an agricultural operation, including improvements to real estate such as terracing, wells, water impoundment and permanently-affixed buildings used for farming purposes.

• The beginning farmer acquiring the farmland must be the principal user of the land, and materially and substantially participate in the operation of the farm.
• The land to be acquired is used only for an agricultural purpose.
• The total amount of loans to finance the land, together with any portion of the loans allocated to financing depreciable property, may not exceed $649,400*. (See specific limits on financing depreciable property.). If real estate acquired with proceeds of a loan includes the financing of used equipment or other property, the value of such used equipment and property financed as part of the loan may not exceed $62,500.

      *adjusted annually for inflation/deflation

Depreciable property used in an agricultural trade or business, including, but not limited to, equipment and breeding livestock.

• The total amount of loans for existing (used) depreciable property/livestock may not exceed $62,500.
• The total amount of loans for both new and existing depreciable property (including breeding stock) may not exceed $250,000.
• The total amount of loans for depreciable property (subject to the foregoing limits), when aggregated with any NIFA loan for real estate, may not exceed $649,400*.

Proceeds of the agricultural loans may not be used to provide working capital or to refinance existing Ag indebtedness incurred more than 60 days prior to NIFA approval. These loans may be used, with certain restrictions, for property purchased at auction.

Agricultural loan proceeds may be used to purchase eligible projects from a related person under certain circumstances. Contact NIFA with questions on individual situations.

Amount

The principal amount of the NIFA agricultural loan may not exceed $649,400*. An individual may not use more than $250,000 to finance any depreciable property and no more than $62,500 to finance used depreciable property or breeding stock.

The purchase price of the agricultural land or depreciable property may be greater than $649,400; in such case, the borrower will need additional equity or will need to acquire other financing for the amount in excess of $649,400.

*NIFA adjusts this amount annually for inflation and deflation.

Terms

The lender and borrower work to negotiate the loan terms, including interest rate, length of term, etc. However: 

• The term of the loan may not exceed 30 years.
• The loan interest rate must be at a rate that is below what the lender would charge on a similar type of loan not financed with proceeds of a tax-exempt bond.
• Another party may assume the agricultural loan, with the prior approval of NIFA and the lender, if they meet the NIFA qualifications.
• A third party (acceptable to the lending bank) may guarantee the repayment of the agricultural loan by the farmer or rancher.

To apply for the Nebraska Beginning Farmer and Rancher Loan Program, follow these steps. 

1. Make sure the eligibility requirements listed above are met.
2. The farmer/rancher locates their own lender and they negotiate the terms of the agriculture loan.
3. Complete the two application forms: 
   1. Form 1: Official Action Certificate
   2. Form 2: Loan Submission Voucher (Lending institution) 
                                                   OR
                   Loan Submission Voucher (Land contract type)
4. Submit both forms along with a $250 application fee to NIFA. NIFA will review the application and move forward once all requirements are met. At that time, NIFA will issue an Intent Resolution to issue bonds.
5. NIFA will hold a public hearing on the issuance of bonds for the project (requiring a public notice published at least 14 days prior).
6. The farmer or rancher may request final approval and preparation of final bond closing documents from NIFA for execution. 
   1. NIFA must obtain approval from the Nebraska Secretary of State prior to loan closing and bond issuance.
7. All parties may then execute documents, close the bond issue, and fund the underlying loan. NIFA typically mails the documents to the loan closing site prior to the closing date. 
8. All payments on the NIFA loan are made directly to the local financial institution servicing the loan. 

The $250 application fee is non-refundable. However, it will apply to the total fees due to NIFA at closing. The farmer or rancher must pay the following fees at the time of closing, which may be paid from (included in) the loan proceeds (in an amount up to 2% of the principal amount of the loan before adding in any fees), if permitted by the purchaser of the bond (the lender):

NIFA Fee: 1 1/4% of the principal loan amount ($250 minimum)

Bond & NIFA Counsel Fee:

Allocation Fee: $150 

For example, the fees on a $150,000 [base] loan would be $2,925: ((150,000 x .0125) + (150,000 x .006) + 150). All or a portion are includable in the loan because $2,925 is less than 2% of $150,000. Therefore, the total loan amount would be $152,925 ($150,000 + $2,925) if all fees were included.

The total fees charged on a loan shall not exceed a maximum limit of $4,775*  (*loans of $250,000 and higher).