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.