The Beginning Farmer Program may not be used to refinance an existing loan. If you wish to participate but have already closed on the loan, CADA must approve the project application within 60 days after any payment is made to acquire the project. If CADA’s approval is not received within 60 days, the loan is considered refinancing and is not eligible for tax-exempt financing.
Are there any conditions?
Yes, borrowers must meet the following conditions:
1. The borrower must be a resident of the state of Colorado.
2. The borrower must be actively involved in agricultural production on the land which is purchased.
3. The borrower must qualify with a lender. Since the lender provides 100% of the capital and 100% of the risk (CADA does not guarantee any part of the loan), their approval is necessary as in any other loan they make.
What are the loan terms?
All loan terms are negotiable between the borrower and the lender including interest rates, payment schedule and the length of the loan.
Interest rates can be either fixed or floating depending on the agreement between the lender and the borrower.
Length of loans
The length of the loan is also agreed upon by the lender and the borrower and reviewed by CADA. Loan lengths cannot exceed 120% of the estimated life of the assets purchased. Equipment loans, therefore, should not exceed six years in length. Land loans, however, can be as long as 30 years.
How much can I borrow?
CADA can finance agricultural land and any new, depreciable agricultural property up to $520,000 (subject to inflation). Loans may include up to $62,500 for breeding stock or used farm equipment.
What can funds be used to finance?
Only the following types of agricultural property can be financed with a beginning farmer loan:
1. Agricultural land
Agricultural land means land suitable for farming or ranching activities. Any agricultural land financed must be located within the boundaries of the state of Colorado.
2. Agricultural improvements
Agricultural improvements mean any improvements to buildings, structures or fixtures, suitable for use in farming or ranching, which are located on the agricultural land which is purchased through the program.
3. Depreciable agricultural property
Depreciable agricultural property means any personal property suitable for use in farming for which an income tax deduction for depreciation is allowable in computing federal income under the Internal Revenue Code. This includes farm machinery, irrigation equipment, etc., but does not include feeder livestock, seed, fertilizer and other types of inventory supplies.