The Montana Beginning Farm/Ranch Loan Program is a tax-exempt bond program designed to assist beginning farmers and ranchers to acquire agricultural property at lower interest rates.
The program enables Montana lenders, individuals, partnerships and other entities to receive federally tax-exempt interest from bonds associated with a loan or contract sale made to a beginning farmer or rancher. The financial institution, after arranging the loan or sales contract, will obtain a federally tax-exempt bond through the department, serving as Montana Agriculture Loan Authority, in the amount of the loan or unpaid balance. The loan and its collateral are assigned to the financial institution as security for the bond.
There is no minimum loan amount, under the program. The financial institution will make a credit evaluation of the beginning farmer/rancher, establish collateral deemed necessary and, with the beginning farmer/rancher, arrange the terms of the loan or contract.
- The beginning farmer/rancher must be at least age 18. There is no upper age limit.
- A beginning farmer/rancher must be a first-time producer regardless of the loan purpose. A first-time farmer/rancher is a person who has never had any direct or indirect ownership interest in an operation of which he/she has materially participated. An ownership interest or material participation by a spouse or minor child will be attributed to the person as well.
- The beginning farmer/rancher must have a net worth not to exceed $450,000.
- The beginning farmer/rancher must be a Montana resident at the time the bond is issued.
- The beginning farmer/rancher must have documented, to the satisfaction of the bond purchaser and the authority, sufficient training and experience in the type of farming/ranching operation for which the bond is requested.
- The agricultural land, improvements and depreciable property must be used for farming/ranching by the beginning farmer/rancher, his or her spouse, or minor children.
- The beginning farmer/rancher may not have previously owned any substantial amount of farm/ranch land. Any parcel of land is substantial farm/ranch land unless the parcel is smaller than 30 percent of the median size of a farm or ranch in the county the parcel is located.
- Beginning Farm/Ranch Loan Program funds may be used to purchase agricultural land, agricultural improvements, and depreciable agricultural property.
- Property may be purchased from relatives only through third-party lenders.
- The loan maximums under existing federal laws are:
- $517,700 for agricultural land and improvements.
- Of the possible $517,700, no more than $125,000 can be for depreciable agricultural property, of which no more than $62,500 can be for "used" property.
Application Must Include:
- There is no formal or defined application period. The loan program is ongoing, therefore an application may be submitted at any time.
The department recognizes some provisions of the program (download the full 16-page program summary) may be confusing to would-be applicants and lenders. Program staff can assist in answering questions or completing documents. Beginning farmers/ranchers and bond purchasers are encouraged to visit with the staff early in the application process for assistance.