Summary
The Next Generation Farmer Loan Program (NGFLP) encourages lenders to finance beginning farmers by allocating a portion of the Commonwealth’s private activity bond volume cap to first-time farmer projects. The loan is made at the lender’s credit standards and other terms and conditions. However, because the program exempts the lender from owing Federal, State, or county income taxes on the interest it would earn from the loan, the lender can offer a lower interest rate than it usually would offer.
Eligible Applicants
Beginning farmers (at least 18 years old with no prior ownership of property valued in excess of $125,000, and whose net worth does not exceed $200,000)
Eligible Uses
- Land and improvements, and other depreciable assets such as machinery and equipment
- May be used between a borrower and lender for a loan to make a direct purchase of a farm and agricultural machinery and equipment or between a buyer and seller for a contract purchase
- Purchase by contract from a related person is permissible under the program, under certain conditions
Loan Amounts
The total loan proceeds allocated to the purchase price of used equipment may not exceed $62,500; otherwise, the maximum loan amount is $250,000
Terms
Due to the nature of the loan, terms for the loan along with any additional conditions will be at the discretion of the individual lender and will depend on the type of project as well as any other factors the lender may deem appropriate.
Interest Rate
Interest rates are set by the individual lender and can often be negotiated lower than current interest rates because of the nature of the loan. Actual interest rates are negotiated between borrowers and lenders, or buyers and sellers in the case of contract sales. Neither PDA nor DCED dictates interest rates in this program. |