The Loan Participation Program assists farmers in making down payments for the purchase of agricultural land, depreciable machinery or equipment, breeding livestock or buildings.
Program Benefits
For Beginning Farmers: The assistance can be used to supplement eligible beginning farmers’ down payment so that they can more readily secure a loan from a participating lender.
For Lenders: The program enables lenders to request a “last-in/last-out” loan participation from IADD.
Eligibility
- Applicants must be a resident of Iowa and 18 years of age.
- Have a net worth of no more than $820,000.
- Have sufficient education, training or experience for the anticipated farm operations.
- Have access to adequate working capital, equipment and other items that are necessary to operate the farm.
- Be the owner/operator.
- Have off-farm income of no more than 50% of their projected total gross income.
- Current Ratio: Cannot be less than 1.1 without guaranteed source of repayment.
- Debt to asset ratio: Cannot exceed 80% without guaranteed source of repayment.
- Debt Service Coverage: Cannot be less than 120% without guaranteed source of repayment.
- Corporations, Partnerships, LLCs are eligible, but the beginning farmer must be listed as a co-borrower.
Program Terms
- Maximum Loan: 30% purchase price or $200,000, whichever is less.
- Closing Fee: 1.50% of IADD participation loan; $300 minimum.
- 10-year terms: Loans can be amortized for 20 years for land purchases or 12 years for facilities with a balloon at 10 years.
Interest Rate
- 2025 Interest Rate: 4.00%
Application Process
- Complete Loan Participation application with lender.
- Submit the completed application and the $100 application fee to the IADD office by the first of the month.
- The IADD Board will review the application; if approved, a Conditional Commitment to Participate will be sent to the lender.
- After completion of the LPP Conditional Commitment, the loan may be closed. The lender will then continue to work with the farmer to service the loan.
