QUALIFICATIONS

A beginning farmer is defined in the federal tax law as an individual who has not at any time had any direct or indirect ownership in substantial farmland in which such individual materially participated. Substantial farmland is farmland which is equal to or greater than 30 percent of the median county farm size or which has a fair market value of greater than $125,000. An individual may have leased farmland or have been a tenant farmer and still be considered a beginning farmer. Land which a farmer disposed of while insolvent is not taken into account in determining whether a person previously had a direct interest in substantial farmland.

LOAN REQUIREMENTS

To obtain a Beginning Farmer Loan, borrowers must meet the following conditions:

1. The borrower must qualify with a lender. Since the lender provides 100% of the capital and 100% of the risk (CADA does not guarantee any part of the loan), their approval is necessary as in any other loan they make.
2. The borrower must be a resident of the state of Colorado.
3. The borrower must be actively involved in agricultural production on the land which is purchased.
4. The borrower must be a beginning farmer.
   

Only the following types of agricultural property can be financed with a beginning farmer loan:

1. Agricultural land. Agricultural land means land suitable for farming or ranching activities. Any agricultural land financed must be located within the boundaries of the state of Colorado.
2. Agricultural improvements. Agricultural improvements mean any improvements to buildings, structures or fixtures, suitable for use in farming or ranching, which are located on the agricultural land which is purchased through the program.
3. Depreciable agricultural property. Depreciable agricultural property means any personal property suitable for use in farming for which an income tax deduction for depreciation is allowable in computing federal income under the Internal Revenue Code. This includes farm machinery, trucks, etc., but does not include feeder livestock, seed, fertilizer and other types of inventory supplies.
   

Beginning Farmers may borrow the following amounts:

• Agricultural property up to $450,000*
• New farm equipment up to $450,000
• Breeding cattle and used equipment up to $62,500
• The above amounts are per family, per lifetime.
  

*subject to inflation

Interest rates. Interest rates can be either fixed or floating depending on the agreement between the lender and the borrower.

Length of loans. The length of the loan is also agreed upon by the lender and the borrower and reviewed by CADA. Loan lengths cannot exceed 120% of the estimated life of the purchase. Equipment loans, therefore, should not exceed six years in length. Land loans, however, can be as long as 30 years.

This loan can be used in conjunction with the Farm Service Agency (FSA) Beginning Farmer Program. Under the FSA Beginning Farmer Program, the borrower must provide a 10% down payment. FSA will provide 30% (unless the borrower requests less), and the remainder of the loan (60% or more) can be funded through a tax-exempt bond issued by CADA.