Governor's Office of Agricultural Policy
Kentucky Agricultural Finance Corporation Announces New Beginning Farmer Loan Program

The Kentucky Agricultural Finance Corporation announces the implementation of a Beginning Farmer Loan program that will be administered through lenders with offices located in Kentucky.

This program has been designed to assist applicants in formulating a business plan, securing needed expertise, and receiving the capital to prepare their farming operation for a successful future. 

The Kentucky Agricultural Development Board (KADB) approved $2,000,000 at their last board meeting for this program. This is after the KADB, at their November planning meeting, revised their Guiding Principles to include, “the Board will seek programs to enhance the viability of young farmers and part-time farmers in agriculture.”

“By establishing this program, the Kentucky Agricultural Development Board and the Kentucky Agricultural Finance Corporation are allowing beginning farmers in the Commonwealth to have the opportunity for a successful future in agriculture and giving producers an easier access to capital, “ said Governor Ernie Fletcher.

These funds will be made available to producers meeting eligibility criteria, established by KAFC.  There must be a commitment by a “lead lender” to work with the borrower to implement the five year business plan and to provide additional financing, as the borrower becomes eligible. Also, identification of a mentor who is willing to advise the borrower on record keeping and business analysis, during the term of the loan, will be required.  Other requirements are as follows:

1. A beginning Farmer or Rancher is defined as:

·         A person who has not operated a farm or ranch for more than 10 years.

·         A person who has substantially participated in the business operation of a farm or ranch for at least three years.

·         A person who does not own a farm or ranch greater than 30% of the average farm or ranch size in the county where his or her operation is located.

2. The applicant and spouse, if applicable, must have a net worth of less than $250,000;

3. The applicants’ personal off-farm income must be less than $50,000 annually, and the total household income must be less than $75,000 annually.

4. An Interest Rate of 2% will be offered and the rate will be fixed for the term of the loan. A 1% servicing fee will be added to the KAFC rate by the lender.

5. Maximum loan term will not exceed 10 years and there will be no penalty for early repayment.

6. All loans will be secured with both fixed assets and the personal guaranty of the borrower.

7. The applicant must provide a 5-year business plan showing a reasonable return and an ability to retire the KAFC debt.

Lenders interested in offering this program and producers who are interested in applying are encouraged to contact Tim Hughes with KAFC at (502) 564-4627 for more information.