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.

Annually effective February 1, the interest rate will adjust to be equal to Wall Street Journal Prime as of January 1. The rate will lock at the time of IADD approval and be fixed for the full 10 year term. Borrowers can achieve lower interest rates by using this program in conjunction with the Beginning Farmer Loan Program.  

Loan Participation Program Qualifications

Beginning Farmers Must:

  • Be a resident of Iowa and 18 years of age at time of application 
  • Have a net worth of no more than $650,590
  • Have sufficient education, training or experience for the anticipated farm operations 
  • Have access to the following as needed: adequate working capital, farm machinery, livestock, agricultural land. 
  • Be owner/operator
  • Land Ownership: No restrictions

Loan Details: 

  • Eligible Projects: Breeding livestock, machinery, land & farm improvements
  • Lender's Certification: Certify that no other private or state credit can be obtained; FSA does not need to certify denial
  • Buy From Close Relatives Yes
  • Minimum Loan: None
  • Maximum Loan: 30% purchase price or $200,000 participation loan
  • Application Fee: $100
  • Closing Fee: 1.50% of IADD participation loan; $300 minimum
  • 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
  • Off-Farm Income: Cannot exceed 50% of beginning farmer’s projected total gross income
  • Corporation, Partnerships, LLCs Eligibility: No
     

Loan Participation Program Benefits

  • The participation can be used to supplement the borrower's down payment so that the borrower can more readily secure a loan from a participating lender.
  • The program enables lenders to request a "lastin/last-out"loan participation from the IADD. 
  • The Loan Participation Program may be used in conjunction with the IADD’s Beginning Farmer Loan Program, providing the borrower meets the criteria for both programs, respectively.

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:
    • Joint Loan Participation Program application (Signed by all borrowers and lender)
    • Financial statement less than 1 month old (Signed by all borrowers and witnessed by lender)
    • Completed Beginning Farmer background form
    • Pro-forma (after-closing) financial statement
    • Global Projected cash flow statement
    • Prior three year's tax returns
    • Credit Bureau report on the borrower
  • 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 $665,288 as of January 1, 2018
  • Annually effective February 1, the interest rate will adjust to be equal to Wall Street Journal Prime as of January 1. The rate will lock at the time of IADD approval and be fixed for the full 10 year term. Borrowers can achieve lower interest rates by using this program in conjunction with the Beginning Farmer Loan Program. 
Notice Contact
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Steve Ferguson | Tax Credit Program Specialist
515.725.4928

Tammy Nebola | Loan Program Specialist 
515.725.4919