The Ag PACE loan provides interest buydown on loans to farmers or ranchers investing in nontraditional agriculture activities to supplement farm income. The loan is used to reduce the interest rate on loans which have been approved by a local lender and BND.
The borrower must be a North Dakota resident whose principal occupation is farming or ranching. A qualified business must be conducted by the borrower or the borrower’s family and is integrated into the farm operation. These businesses include:
- Nontraditional agriculture
- Processing, and value-added processing
- Targeted services industries
It is desirable that the value-added processing is located in North Dakota; however exceptions may be made based on the overall economic benefits to the state. Traditional production agriculture does not qualify for this program.
Proceeds may fund value-added or non-traditional activities to supplement farming or ranching income. Examples include, but are not limited to:
- Financing of subsurface field tiling projects
- Purchase of irrigation equipment on new irrigated acreage
- Purchase of shares in the start-up or expansion of processing plants processing North Dakota-grown products
- Purchase of capital improvements for retention of livestock
- Purchase of capital improvements for dairy operations
- Purchase of equity shares in a condominium grain storage entity.
A borrower that receives interest buydown from the Ag PACE is not eligible to receive interest buydown under Envest for the same project.
The total loan amount may not exceed the cost of the project.
The total buydown amount per borrower may not exceed $20,000 per project or biennium. Buydown funds up to $60,000 over the lifetime of the borrower are available if applied for on a separate project or in a separate biennium. In order to receive buydown funds in excess of $20,000, the applicant must have a net worth of less than $1,000,000. State Water Commission Funds, not exceeding $20,000 per borrower, may be used to supplement Ag PACE funds to purchase irrigation equipment on new irrigated acreage.
Interest rate: The borrower receives an interest rate buydown of up to 4% below the yield rate with a minimum rate of 1%. The lead lender and BND set the interest rate to be yielded by the lenders. The difference between the interest charged by the lenders (yield rate) and that paid by the borrower (borrowing rate) is provided to the lenders by the AgPACE and/or the State Water Commission Funds.
Fees: Origination fee $250 minimum
BND uses its normal credit standards in reviewing the loan. These standards include loan size and type of project.
Adequate collateral required
Appraisal requirements are evaluated on a case-by-case basis.
BND is required to take at least 50 percent, and not more than 80 percent, of the total loan. Borrower must work with a local lender to submit the loan application. Lead lender is responsible for servicing the loan.
- Equipment 5-7 years
- Real estate up to 25 years
If the borrower is in default under the loan agreements, the interest rate on the loan changes from the buydown rate to the original higher interest rate. The borrower shall accrue interest at the higher interest rate and all interest rate buydown funding is suspended until the loan is brought current.