Summary
First Industries loan guarantees provide private lenders with a risk management tool, and agricultural borrowers access to private credit sources at potentially lower-risk rates and terms. Once the lender and the loan are approved by CFA, lenders receive a certificate from CFA promising to repay the loan at 50 cents on the dollar if it turns out that the borrower cannot repay. The total pay-off cannot exceed $2.5 million.
Eligible Applicants
Lenders may either enroll in the First Industries program in advance or receive approval from CFA with their first application. Advance enrollments allow faster processing for individual loans, since the lender’s track record has already been examined by CFA.
- Any individual or company eligible for First Industries can apply to CFA for a loan guarantee, or a private lender can apply to CFA on its borrower’s behalf
- Any lender that is a commercial bank or savings & loan association can enroll in the loan guarantee program
- AgChoice and Mid-Atlantic Farm Credit currently are not eligible for guarantees per statutory definitions
Loan Guarantee Conditions
To apply for a guarantee, the applicant must submit an application to the CFA that includes all of the following information:
- Information about the applicant and business
- A description of the project to be funded, including a statement of the anticipated economic impact and the impact, if any, on prime farmland.
- A description of all sources of financing for the project
- Prior two years of financial statements
- Meets all regulatory and permitting requirements
- Any other information required by the CFA
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