Beginning Farmer Loan Programs

The Beginning Farmer Loan Programs assist the farmer and rancher in the purchase of farm real estate and/or the purchase of equipment and livestock. Each qualified applicant is eligible for a $400,000 loan from the Real Estate Loan Program and $400,000 loan from the Chattel Loan Program.

Applicant

A beginning farmer is required to meet the following criteria:

• The applicant must be a North Dakota resident.
• Real Estate Program Only – The applicant may not have owned any farmland greater than 30% of the average farm size in the county the parcel is located.
  
• Chattel Program Only - The applicant may not have previously farmed for more than 15 years. This eligibility requirement is determined by totaling the number of years the applicant has received federal farm program payments.
  
• The applicant intends to use real estate for agricultural purposes.
• The applicant has a net worth, including that of any dependents and spouse, of less than $500,000.
• The applicant’s principal occupation is or will be the production of an agricultural commodity on a family farm.

Real Estate Loan Program

BND Funding Limit - Funding will not exceed a $400,000 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. For the second five years of the loan, interest is variable at 1% below BND's then current base rate adjusted annually on the anniversary date. For the remaining period of a loan, interest is variable and adjusted equal to BND’s base rate.

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 requires 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 – This is a 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.

• 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 which demonstrates that a loan meets BND's collateral requirements. The cost of this appraisal is paid by the borrower. (This appraisal does not need to 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 may cancel the commitment without further notice to the borrower.

Chattel Loan Program

BND Funding Limit - The limit is set at not less than 50% nor greater than 80% of the total loan amount with a lifetime cap of $400,000 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% per year for the first five years of the loan. Interest is variable at 1% below BND's then current base rate for the next two years, adjusted annually on the anniversary date.

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 seven years. Annual amortized payments are required.

Collateral - Collateral shall be first security interest on the chattels, not to exceed 80% of the agricultural collateral value.

Lender - Any financial institution currently qualified to participate in a loan with BND 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. The lead lender is responsible for servicing the loan.

For more information please contact us at:

Bank of North Dakota
1200 Memorial Hwy
PO Box 5509
Bismarck, ND 58506-5509
(701) 328-5624
1-800-472-2166 ext. 5624
TDD (Telephone Device for the Deaf) 1-800-643-3916