Iowa Finance Authority
Programs

Loan Participation Program

The Loan Participation Program (LPP) was established in 1996 to assist low income farmers secure loans and make down payments. IADD’s participation can be used to supplement the borrower’s down payment, thereby helping a farmer secure a loan more readily. The lender’s risk is also reduced since the IADD provides a "last-in/last-out" loan participation for the financial institution.

Effective October 1, 2013, the interest rate will be 1.0% over the FSA Direct Farm Ownership Down Payment Loan Program (which is currently at 1.5%) fixed for the first five years, then re-adjusted to the same index and fixed for the final five years. Borrowers can achieve lower interest rates by using this program in conjunction with the Beginning Farmer Loan Program. One promissory note will be applied to the entire loan.

Several banks have inquired as to using both the IADD participation loan and the FSA 5/45/50 beginning farmer loan program. Previously this was not possible as the IADD participation loan had a maximum 20-year amortization, while the FSA loan required a 30-year amortization on any companion financing. The IADD board has approved a 30 year amortization on IADD participation loans only when the FSA program is also utilized.

Application/Approval Procedures

  • Obtain a copy of the Loan Participation Program (LPP) Application
  • Complete application with lender
  • Submit the completed application and $100 application fee to the IADD office, along with the following items:
  • By Lender
    • Background Letter
    • Lender's Security Analysis
    • Debt Repayment Analysis
    • After-Closing Financial Statement
    • Projected Income Statement
    • Appraiser's Certification (third party)
  • By Loan Applicant
    • Loan Participation Program Application
    • Financial Statement less than 1 month old
    • Prior 2 years' Financial Statements
    • Prior 3 years' Income Statement or Tax Returns 
  • 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.
Notice Notice
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  • Maximum net worth is $672,171 as of January 1, 2016
  • Effective October 1, 2013, the interest rate will be 1.0% over the FSA Direct Farm Ownership Down Payment Loan Program (which is currently at 1.5%) fixed for the first five years, then re-adjusted to the same index and fixed for the final five years.
  • Previously, a bank needed to provide a bridge loan until the IADD funds were received to purchase IADD's portion of the participation; with the assistance of the Iowa Treasurer's Office, the bank will be able to receive IADD's participation funds the same day as the closing - no bridge loan will be needed
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Steve Ferguson | Program Planner

Tammy Nebola | Program Planner