Beginning Farmer Loan Program

CADA loan program is known as the Beginning Farmer Program. The program involves a three-way transaction among the lender, the borrower and CADA. Through the issuance of a tax-exempt bond by CADA to the lender, all interest paid by the borrower is tax-exempt. The result is an interest rate to the borrower below commercial rates.

New in 2017!
Farm Lease Income Tax Deduction Program
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Process


Find a Lender. The first step in getting a loan is to locate a lender. This can be a bank, savings and loan, insurance company or other lending institution which will loan funds through this program. It can also be a private individual, including the current landowner, if certain requirements are met.
When the borrower qualifies with the lender, a loan application, preliminary agreement and application fees (see below) must be submitted to CADA. Visit CADA online for an application and mailing information.

After the application has been reviewed and approved by the CADA Board, a closing date will be set.

CADA issues a tax-exempt bond to the lender. A bank purchasing the bond should be aware, however, that interest received on the bond will probably have the effect of reducing the interest expense deduction that the bank may otherwise have available for income tax purposes.
The lender’s payment for the bond will pass through CADA to the borrower to fund his/her project. The borrower’s payments on the loan are assigned by CADA to the lender, thereby becoming the payments on the bond.

Fees


There are certain fees associated with obtaining a beginning farmer loan through this program. These fees include:

Application Fee

A non-refundable $50 application fee payable to CADA.

Legal Fees

Ranging from $750-$1,250 for drafting the necessary document ($750 for loans of $100,000 or less; $1,000 for loans ranging from $100,001 to $200,000; and $1,250 for loans over $200,000. Larger loans may have higher fees).

Closing Fee

Of 1/4 of 1 percent (minimum of $100) which covers the costs CADA experiences in closing the loan (the application fee will be applied to CADA’s closing fee); and,

Annual Fee

Equal to 1/8 of 1 percent of the unpaid principal of the bond. The lending institution may also charge usual and customary fees and points which are mutually agreed upon by the lender and borrower and are approved by CADA.

NOTE: this loan can be used in conjunction with the Farm Service Agency (FSA) Beginning Farmer Program. Please refer to FSA guidelines for qualifications.