4.10. SR 09-08-2020 - Laserfiche WebLink

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Brief Summary of the AgBMP Loan Program Many of the state's local Soil and Water Districts and County Environmental Offices are cooperating with the Minnesota Department of Agriculture in offering a low interest loan program to encourage farmers and landowners to implement practices that prevent pollution and improve water quality. All financial institutions offering loans are invited to participate in this program, providing service to the local community, and helping to protect our environment. Basically, the Department of Agriculture will provide funds to lenders at no cost for any eligible loans you issue under this program. We can fund septic systems, wells, purchase of conservation tillage farm equipment, agricultural waste storage basins, manure handling and application equipment, erosion control structures such as terraces, gully repairs, and sedimentation basins, and odor control methods. Nearly any practice that prevents pollution is eligible, though the project must first be approved by the participating local government unit (SWCD or County Environmental Office). Once the initial eligibility is determined by the local government, the client would be referred to any of the participating local lenders who would determine the creditworthiness of the client and the project. The local lender has full discretion to approve or deny a loan and can select the types of projects they will support. Although the primary target of the program is farmers, ate[ rural landowner is eligible whether or not they farm (local governments define "rural", in addition we have funds that can be used anywhere). Lenders are not required to issue a loan even if the project is approved by a county. Loans may be issued up to a maximum of $200,000 and for a maximum term of 10 years. The lender determines all other loan conditions such as repayment schedule, equity requirements and collateral. The interest rate to a borrower is limited to 3% of the outstanding balance. Lenders may also charge their usual and customary closing fees, provided the fee is consistent with fees assessed to other similar loans offered by the lender. The lender receives the funds from the MDA at 0%. As the lender, you would be obligated to repay the Department. Typically, you would make semi- annual repayments to the Department approximately equal to the amount of principal repayment you have received from borrowers. The actual repayment schedule would be based on the terms at time of closing for the individual loans you issue. The Department will consolidate all loans through your organization and provide periodic invoices for repayment usually due on 4/1 and 10/1 of each year, starting within one year after the loan has been closed. To date, this program has provided $220 million for over 13,000 loans. If you choose to participate, this agreement is valid for projects anywhere in the state and not limited to any specific county. If you have other branches under the same charter, they can participate under this contract as well. In addition to the interest rate and fees, this program can provide several other significant benefits to you: ❖ You can add this low interest loan program to your portfolio of loan products to better serve and retain your current clients. ❖ Additional customers maybe referred to your organization through the program. ❖ You maybe able to provide special promotions to solicit new customers. ❖ You maybe able to include this program as apart of your community service efforts. This program has proven to be a valuable tool that promotes conservation and improves water quality across Minnesota. Your participation will help implement the State and local water quality goals with a community -service perspective. If you have any questions, please call me at the above telephone number. 08/26/2020 1