The Kentucky Agricultural Finance Corporation (KAFC) approved two new programs to assist Kentucky farmers and agribusinesses at their May board meeting: the Agricultural Infrastructure Loan Program and the Producer Accelerated Payment Program.
The Agricultural Infrastructure Loan Program (AILP) is designed to help Kentucky agricultural producers with a history of tobacco involvement finance long term projects that will improve their financial viability. Applicants must receive at least 20% of their gross income from farming, and provide documentation of a recent history in tobacco involvement. The KAFC portion of the AILP loan cannot exceed $100,000 or 50% of the project..
The AILP will provide assistance for the financing of buildings or structures with attached equipment for agricultural uses only. Eligible projects will include but not be limited to livestock and poultry barns, grain storage facilities, greenhouses, tobacco barns, ponds, and other projects at the discretion of the KAFC board. The AILP can not be used for operating expenses or to refinance existing debt.
The KAFC has set an initial interest rate of 2% for AILP loans, originating from a participating lender; this rate can be fixed for up to 10 years. The lender will be allowed to charge the borrower up to an additional .75% interest on KAFC’s portion of the loan for origination and servicing. Additional financing will be at the lender’s normal rate. For applications without bank participation, the rate will be 3.75% and additional conditions must be met. All loans will be approved at the discretion of the KAFC Board of Directors.
The Producer Accelerated Payment Program (PAPP) is designed to offer entities marketing Kentucky grown agricultural commodities the ability to offer advance payments of up to 75% of wholesale value to the producer upon delivery of their products. The program is available to any wholesale marketer of Kentucky grown agricultural commodities. The KAFC will require the marketer to pledge their accounts receivables as security for the loan, and the funds will be managed by a third party administrator. This program will allow produce growers and other producers who normally wait 60 to 90 days for payment to get a substantial portion of their income much earlier.
To learn more about these programs and other opportunities available through the Kentucky Agricultural Finance Corporation contact Tim Hughes, KAFC Marketing and Business Development Coordinator, at (502) 564-4627 or visit the KAFC website at http://kafc.ky.gov/.