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Beginning Farmer Loan Programs
The Beginning Farmer Loan Programs assist the farmer and rancher in the
first time purchase of farm real estate and/or the purchase of equipment
and livestock. Each qualified applicant is eligible for a $250,000 loan
from the Real Estate Loan Program and $250,000 loan from the Chattel Loan
Program.
Applicant
A beginning farmer is required to meet the following criteria:
- Be a resident of North Dakota.
- Real Estate Program Only - May not have owned any farmland greater than 30% of the median farm size in the county the parcel is located.
- Chattel Program Only - The person may not have previously farmed for more than 15 years. This
eligibility requirement will be determined by totaling the number of years
the applicant has received federal farm program payments.
- Intends to use real estate for agricultural purposes.
- Has a net worth, including that of any dependents and spouse, of less than
$300,000.
- The principal occupation is or will be the production of an agricultural commodity on a family farm.
Real Estate Loan Program
BND Funding Limit - Not to exceed 75% of the appraised value with a $250,000 lifetime cap
per borrower.
Use of Proceeds - The proceeds shall be used to purchase agricultural real estate.
Borrower's Rate -The interest rate is fixed at 1% below BND's current base rate with a maximum of 6% per
year for the first five years of the loan and variable at 1% below BND's
then current base rate for the next five years, adjusted annually on the
anniversary date. For the remaining period of a loan, interest is charged
at BND's base rate as in effect from time to time.
Term - The term of a loan may not exceed 25 years. Annual amortized payments are required.
Collateral - BND may lend up to 75% of the appraised value of the real estate to
be pledged as collateral. A first mortgage is required on the property
being used as collateral. In addition, BND will require an assignment of
rents.
Fees - All costs incurred by BND in connection with a loan application
and a loan closing must be paid by the borrower.
Lender - Direct loan with Bank of North Dakota.
Application Process - Loan Application is made directly to BND and should include information sufficient for
BND to properly evaluate the loan request. This information should contain,
at a minimum:
- A completed BND loan application with necessary documents.
- The borrower's three previous year's financial statements.
- Copies of the borrower's three previous year's tax returns.
- FSA aerial photos of the subject property.
- A narrative explaining the loan request, farming experience and management ability of the borrower.
In addition, BND will require:
- Hazard insurance on buildings used as collateral naming BND as "loss payee".
- Current qualified appraisal of the real estate. The appraisal is used to demonstrate that a loan meets BND's collateral requirements. The cost of this appraisal is paid by the borrower. (This appraisal should not be ordered until BND has reviewed the loan request.)
Additional information may be required depending upon the circumstances
of the loan and the borrower. BND will follow its normal loan review procedures
in evaluating the loan. Once the application has been approved and the
commitment given, the borrower may have up to 90 days to draw the funds.
If the funds have not been drawn within the commitment period, BND will
cancel the commitment without further notice to the borrower.
Chattel Loan Program
BND Funding Limit - Not less than 50% nor greater than 80% of the total loan amount with
a lifetime cap of $250,000 per borrower.
Use of Proceeds - The proceeds shall be used to purchase equipment or livestock.
BND's Rate-The interest rate is fixed at 1% below BND's current base rate with a maximum of 6% for
the first five years of the loan and variable at 1% below BND's then current
base rate for the next two years, adjusted annually.
Lender's Rate-The interest rate may not exceed 3% over BND's current base rate and may
be variable or fixed. Interest buy down funds, to the extent that they
are available, will be used to reduce the lead lender's rate by up to 5%
subject to a minimum rate of 1% to the borrower.
Term - The term of a loan may not exceed 7 years. Annual amortized payments
are required.
Collateral - First security interest on the chattel, not to exceed 80% of the agricultural
collateral value.
Lender - Any financial institution currently qualified to participate in a loan
with Bank of North Dakota is qualified to participate in this program.
Application Process - Application by a lead lender is required for BND's participation along with the Beginning Farmer Chattel Loan Eligibility Certification form. See application for additional documentation required when submitting a request to BND. Lead lender is responsible for servicing the loan.
For more information about these programs or other Bank of North Dakota
programs, contact:
Bank of North Dakota
1200 Memorial Hwy
PO Box 5509
Bismarck, ND 58506-5509
(701) 328-5786
1-800-472-2166 ext. 5786
TDD (Telephone Device for the Deaf) 1-800-643-3916
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