If you’re a farmer or rancher in Nebraska, NIFA has a program to help you start or scale your agribusiness. The NIFA Beginning Farmer/Rancher Loan Program helps eligible farmers and ranchers access agricultural loans at lower interest rates than those available in the conventional farm credit markets.
NIFA issues a bond (purchased by the bank or other lender of the borrower’s choosing) and the interest is exempt from federal and Nebraska state income tax. The lender then sets the interest rate on the agricultural loan to reflect the tax-exempt rate on the bond, providing a lower rate for eligible farmers and ranchers.
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:
Note: The aggregate amount of the loans cannot exceed $558,000 (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.
Depreciable property used in an agricultural trade or business, including, but not limited to, equipment and breeding livestock.
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.
The principal amount of the NIFA agricultural loan may not exceed $558,000*. 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 $558,000; in such case, the borrower will need additional equity or will need to acquire other financing for the amount in excess of $558,000.
*NIFA adjusts this amount annually for inflation and deflation.
The lender and borrower work to negotiate the loan terms, including interest rate, length of term, etc. However:
To apply for the Nebraska Beginning Farmer and Rancher Loan Program, follow these steps.
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:
|Up to $29,999||$475|
|$30,000 to $99,999||$675|
|$100,000 and higher||.6 of 1% of principal loan amount ($675 minimum)|
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).