The New York Beginning Farmer Loan Program (BFLP) provides low-cost financial assistance to beginning farmers in New York State (NYS) for the purchase of agricultural property and equipment to help start a farming business or to facilitate inter-generational transfer of a farm business.

The BFLP is administered by the NYS Environmental Facilities Corporation (EFC), in conjunction with the NYS Department of Agriculture and Markets (NYSDAM).

To participate in the BFLP, the beginning farmer works with a Lender to arrange the terms of a loan based on the applicant's credit rating, the type of loan, etc.  NYS does not directly provide funds to finance the loan instead the BFLP acts as a conduit by issuing and selling a tax-exempt bond ("aggie bond") to the Lender.  The tax-exempt status enables the Lender to give a better interest rate to the borrower, usually around 1 to 2 percentage points less than the usual taxable interest loan.

While the BFLP loan maximum for 2009 is $469,200, there is no minimum loan amount.  The maximum term of the loan is up to 40 years, as determined by the useful life of the equipment or property being financed.

BFLP fees include a non-refundable, $150 application fee and a 1.5% loan closing fee.  The minimum loan closing fee charged is $750.  Total State fees for a $469,200 loan are $7,038. 

The BFLP was created pursuant to Chapter 366 of the Laws of 2004.  It amended the New York State Public Authorities Law by adding section 1285-r, which authorizes EFC to establish and administer the BFLP and to consult with NYSDAM regarding the Program.  With the BFLP, EFC is authorized to provide financial assistance for the purchase of agricultural land, improvements, and other agricultural property for any agricultural facility by beginning farmers.  NYSDAM’s role in the BFLP is to provide technical support and marketing assistance to EFC.

BFLP may be used to purchase agricultural land and depreciable agricultural property or to make agricultural improvements.  The loan maximums under existing New York and federal laws are:

• A lifetime total of $450,000 (adjusted annually for inflation as provided in the Internal Revenue Code (IRC)) for agricultural land and improvements.
• Up to $250,000 to finance depreciable agricultural property.
• Up to $62,500 to finance "used" depreciable agricultural property.
• Up to 5% of bond proceeds to purchase residential property.

To be eligible, a Beginning Farmer:

• Must be an individual.  Loans to corporations, partnerships, LLCs, etc. are ineligible under the (IRC).
  
• May not have previously owned any substantial farmland, as defined in federal laws.
  
• Labor must be performed and management provided by the Beginning Farmer, his or her spouse/fiancée, and/or minor children.  The beginning farmer may not cash, rent, or custom hire a majority of the field work or livestock management to be completed.

For further details, see the Program Summary.

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