Agriculture Loans for Alaska Farmers

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ABM-00240

                              Agriculture Loans for
                                Alaska Farmers
                                   Sources of financing for Alaska agriculture enterprises

This publication contains information on sources                  Agricultural Loans
of financing for agricultural producers in Alaska.
It describes lending programs and their purpose,      • Agricultural Revolving Loan Fund (ARLF)
borrower eligibility requirements, loan types, loan   • Alaska Rural Rehabilitation Corporation
terms and contact information. To learn how a           (ARRC)
program might fit the needs of an individual enter-   • Northwest Farm Credit Services (Northwest
prise, readers should speak with a loan officer.        FCS)
                                                      • Farm Service Agency (FSA)
Loan programs change, so this information will        • Alaska Commercial Fishing and Agriculture
become out-of-date with the passage of time. For        Bank (CFAB)
current information, prospective borrowers should     • Related Organizations and Additional Resources
use the contact information for each program or         for Alaska Agriculture and Rural Development
request assistance from their local Cooperative
Extension Service office.                             While each of these programs provides agriculture
                                                      loans, they are different in the types and purposes
We offer this bulletin as an introduction to the
                                                      for which they lend. An understanding of each pro-
credit options available to Alaskans. Borrowing
                                                      gram is essential to avoid wasted time and effort.
can determine the success or failure of a business
enterprise. We hope that this information will help   The following summary provides a better under-
Alaskans make choices that will maximize their        standing of each loan program. Contact your local
chances for success.                                  banker for additional sources of financing for farms
                                                      in Alaska.
Agricultural Revolving Loan Fund                                  Payment Terms
              (ARLF)                                              Loan terms will be based on a borrower’s ability to
                                                                  service the loan. Payments may be monthly, quar-
The purpose of the ARLF is to promote the devel-                  terly, semi-annual or annual.
opment of agriculture as an industry throughout
Alaska by means of moderate interest rate loans.                  Interest Rates & Fees
Loan applications must be submitted on ARLF                       Fixed interest rates are comparable to rates charged
forms. After ARLF staff evaluation, they are sub-                 by other Alaska agricultural lenders and established
mitted to the Board of Agriculture and Conserva-                  by the Board of Agriculture and Conservation. A
tion for consideration at the next scheduled meet-                $50 non-refundable application fee is required.
ing.                                                              Contact
Eligibility                                                       State of Alaska
Applicants must provide a description of their                    Division of Agriculture
business and agricultural experience. Loans may                   Agricultural Revolving Loan Fund
be made to individual Alaskans, partnerships, joint               1800 Glenn Hwy., Suite 12
ventures, corporations or other business entities.                Palmer, AK 99645-6736
Proof of current Alaska residency must be pro-                    Phone: 907-745-7200
vided.                                                            Fax: 907-745-7242
Conditions                                                        Website: dnr.alaska.gov/ag/ag_arlf.htm
Loan funds may only be used for agricultural pro-
duction or processing operations in Alaska.
Collateral
Loans must be secured by collateral acceptable to
ARLF and may not exceed 75 percent of appraised
collateral value. Collateral may include land, im-
provements, machinery, equipment, crops or live-
stock.

 ARLF LOAN TYPES                          PURPOSE                        MAXIMUM LOAN             MAXIMUM TERM

 Farm Development         purchase/construct land and buildings             $1,000,000            30 years — 4.50%
 (nonresidential)

 Chattel                  purchase equipment or livestock                   $1,000,000             7 years — 4.00%

 Short-term               operating expenses                                 $200,000              1 year — 3.00%

 Irrigation               equipment purchase and installation               $1,000,000            30 years — 4.50%

 Product Processing       build and equip processing facilities              $250,000             30 years — 4.50%

 Clearing                 land clearing                                      $250,000             20 years — 4.50%

Total outstanding balances of ARLF loans for a borrower may not exceed $1,000,000.

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Alaska Rural Rehabilitation                            Interest Rates & Fees
         Corporation (ARRC)                                  Competitive fixed-interest rates are established by
                                                             the board of directors. A $100 nonrefundable ap-
ARRC is a nonprofit corporation dedicated to the             plication fee that includes the cost of a credit report
permanent development of Alaska agriculture. It              is required. Additional fees may be charged for pre-
was originally created to support the Matanuska              liminary title report ($250) UCC-1 fees ($20) and
Valley colonization project in 1935. It now provides         any other costs that are required to properly place
financing for Alaskan agricultural producers.                ARRC in first lien position.
Eligibility                                                  Contact
Applicants must provide evidence of business                 Alaska Rural Rehabilitation Corporation
experience and Alaska residency. Loans may be to             248 E. Dahlia Ave.
individuals, partnerships, joint ventures, corpora-          Palmer, AK 99645
tions or other business entities.
                                                             Phone: 907-745-3390
Conditions                                                   Fax: 907-746-3555
Loan funds may only be used for agricultural pur-            Email: arrc@mtaonline.net
poses in Alaska.                                             Website: arrc.us/loans
Collateral
In Alaska, loans must be secured by collateral ac-
ceptable to ARRC and may not exceed 70 percent
of appraised collateral value. Collateral may include
equipment, machinery, land, improvements, boats,
motor homes and vehicles, but not crops or ani-
mals.
Payment Terms
Payment terms will be based on a borrower’s ability
to service the loan and may be monthly, quarterly,
semi-annual, annual or variable.

 ARRC LOAN TYPES                         PURPOSE                         MAXIMUM LOAN           MAXIMUM TERM

 Chattel               purchases of new and used farm equipment                none              7 years — 5–9%

 Real Estate           purchases of land, buildings and equipment              none              20 year — 5–9%

 Future Farmers        promote a working knowledge of agriculture              none              5 years — 5–9%
                       10–25 years of age
 Line of Credit        any farming use                                         none              5 years — 5–9%

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Northwest Farm Credit Services                                     Interest Rates & Fees
        (Northwest FCS)                                              Northwest FCS offers a variety of interest rate and
                                                                     fee programs depending on the loan purpose,
Northwest Farm Credit Services (Northwest FCS)                       repayment terms, risk level and flexibility you need.
is a customer-owned financial cooperative pro-                       Loan structures and repayment plans largely deter-
viding nearly $12 billion in financing to farmers,                   mine eligible rate programs.
ranchers, agribusinesses, commercial fishermen,
timber producers and country home owners as well                     Contact
as farm-related businesses, agricultural coopera-                    Northwest FCS-AgVision
tives and rural utilities in Idaho, Montana, Oregon,                 629 South Market Blvd.
Washington and Alaska. Its AgVision program                          P.O. Box 420
provides financing for young, beginning or small                     Chehalis, WA 98532-0420
producers through flexible underwriting standards                    Phone: 360-767-1100
and competitive interest rates.                                      Fax: 360-1105
Eligibility                                                          Toll-Free: 800-642-9005
Applicants may be part-time farmers, full-time                       Website: www.northwestfcs.com/products-and-
farmers, young and beginning producers, com-                           services/real-estate-financing
mercial operations, and large, vertically integrated
businesses.
Collateral
Loans are secured by collateral acceptable to North-
west FCS. Collateral may include land, improve-
ments, equipment, machinery, commercial fishing
vessels, crops, livestock, feed or inventory.
Payment Terms
Payment terms will be based on product type and
may be monthly, quarterly, semi-annual, annual or
variable.

PRODUCT TYPES                                 PURPOSE                                MAXIMUM LOAN           TERM
Operating Loan or Line of   operating expenses                                 none                        1–3 years
Credit
Chattel                     purchase of new or used farm machinery or          none                       1–10 years
                            equipment, livestock or other eligible items
Real Estate                 purchase or refinance of land, home, buildings     none                       5–25 years
                            and equipment
JumpStart                   start-up capital for equipment purchase, real      $100,000.00                  5 years
                            estate down payment or operating expense
RateWise                    accumulate credits after attending manage-         N/A                           N/A
                            ment training experiences to reduce interest
                            rates on new loans; free registration for every-
                            one on the website

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Farm Service Agency (FSA)                                          FSA also makes and services direct Farm Owner-
                                                                         ship (FO) and Operating Loans (OL) in addition to
The Farm Service Agency (FSA) is responsible for                         providing credit counseling and loan supervision.
overseeing and implementing policies and pro-
cedures that regulate the delivery of federal farm                       Contact
programs.                                                                USDA Farm Service Agency
                                                                         www.fsa.usda.gov/FSA/stateoffapp?mystate=ak&ar
Nonrecourse Marketing Assistance Loans: Non-                              ea=home&subject=landing&topic=landing
recourse marketing assistance loans allow a pro-
ducer growing eligible crops to store production                         Alaska State Office
and use the loan proceeds to meet cash flow needs                        800 West Evergreen Ave, Suite 216
without selling the crop. Crop is used as collateral                     Palmer, AK 99645
for the loan.                                                            Phone: 907-761-7738

Farm Storage Facility Loans: Low interest financ-                        Southern Service Center
ing to producers to build or upgrade farm storage                        800 West Evergreen Ave, Suite 216
and handling facilities for eligible commodities that                    Palmer, AK 99645
include grains, hay, fruits and vegetables.                              Phone: 907-761-7754

Farm Loan Program                                                        Northern Service Center
Two types of financing are offered in this program:                      P.O. Box 585
guaranteed loans and direct loans. FSA-guaranteed                        Delta Junction, AK 99737
loans provide conventional lenders with up to a 95                       907-895-4242
percent guarantee of the principal amount of loans
made to agricultural producers. Farmers interested
in this program must first apply to a conventional
lender, who then arranges for an FSA guarantee.

 FSA LOAN TYPES                              PURPOSE                                MAXIMUM LOAN               MAXIMUM TERM

 Direct Farm Ownership         purchase land, construct buildings/                       $300,000                 40 years
                               improvements, soil and water
                               conservation
 Beginning Farmer Down         purchase a farm or ranch                                  $300,000                 20 years
 Payment Farm Ownership
 Direct Operating              purchase livestock, poultry, equipment,                   $300,000                1 to 7 years
                               feed, seed, supplies; soil and water
                               conservation; farm chemicals,
                               insurance, refinancing
 Microloan                     same as Direct Operating                                  $50,000                 1 to 7 years
                               simplified application process

 Direct Emergency              See FSA for details in the event of a
 (drought, flood and natural   natural disaster declaration in your
 disasters)                    area.

 Guaranteed Operating          same as Direct Farm Operating with           $1,355,000 adjusted annually for     1 to 7 years
                               addition of refinance option                 inflation
 Guaranteed Farm               same as Direct Farm Ownership with           $1,355,000 adjusted annually for      40 years
 Ownership                     addition of refinance option                 inflation

                                                                     5
Alaska Commercial Fishing and                            Interest Rates
     Agriculture Bank (CFAB)                               Rates are variable and are determined by the col-
                                                           lateral and the credit strength of the borrower. As a
Alaska Commercial Fishing and Agriculture Bank             cooperative, CFAB returns a share of its profits to its
(CFAB) is a private member-owned cooperative               borrowers through patronage and dividend pay-
providing financing to Alaskans and Alaskan-               ments.
owned businesses serving the commercial fishing,
agriculture, timber, tourism and resource-based            Purpose
industries of Alaska. CFAB is an authorized lender         Any commercial purpose.
for two important federal entities, the U.S. Export-       Contact
Import Bank (EXIM) and the U.S. Department of              CFAB
Agriculture (USDA) Rural Development Business              P.O. Box 92070
and Industry guaranteed loan program (See USDA             Anchorage, AK 99509-2070
Rural Development in this publication). CFAB is
the only Alaska lender approved by EXIM bank.              3040 Lakeshore Drive
                                                           Anchorage, AK 99517
Eligibility
Alaska resident.                                           Phone: 907-276-2007 or 800-544-2228 (outside
                                                             Anchorage)
Loan Amount                                                Fax: 907-279-7913
The loan amount is generally based on the pro-             Email: cfabanch@gci.net
jected needs, profitability and credit worthiness of       Website: www.cfabalaska.com
the borrower.
Terms
The length of the loan may range from 1 to 20
years. Loans are structured to the specifics of the
credit.

                                                       6
Additional Rural Assistance                              and telecommunications. Rural Development is an
    Organizations and Programs                               agency of the U.S. Department of Agriculture and
                                                             provides rural utilities programs, rural housing
Alaska Housing Finance Corporation                           programs and rural business cooperative programs.
(AHFC)                                                       It also contains the Office of Community Develop-
Alaska Housing Finance Corporation (AHFC) of-                ment. USDA Rural Development is committed to
fers a variety of loan programs, including loans for         the future of rural communities.
single-family and multi-family housing and loan
options and other programs for both urban and                Contact
rural areas. Rural options include the (1) the Rural         USDA Rural Development Alaska State Office
Non-Owner-Occupied Loan Program and (2) Rural                800 W. Evergreen, Suite 201
Owner-Occupied Loan program. These programs                  Palmer, AK 99645-6539
offer terms that are intended to address the often           Phone: 907-761-7705
unconventional needs of Alaskans living in small             Fax: 907-761-7783
communities. The AHFC also provides information              Website: www.rurdev.usda.gov/RD_loans.html
through its Research Information Library as well as
publications about log building construction and an          Alaska Economic Development Resource
Alaskan Housing Manual. This program also over-              Guide
sees the comprehensive weatherization of homes in            The Alaska Economic Development Resource Guide
rural Alaska.                                                is designed to bring together in one place an in-
                                                             ventory of programs and services that can provide
Contact                                                      economic development assistance to Alaska commu-
AHFC                                                         nities and businesses.
P.O. Box 101020
Anchorage, AK 99510-1020                                     Federal and state agencies as well as national and
                                                             Alaska private nonprofit agencies are represented.
Phone: 907-338-6100 or 800-478-2432                          This directory primarily describes those programs
Fax: 907-338-9218                                            that focus on the creation and support of new indus-
Website: www.ahfc.us/buy/loan-programs/rural-                tries, businesses and long-term jobs. It is designed
  programs                                                   to help communities match their economic develop-
USDA Rural Development (USDA-RD)                             ment strategy with existing program resources that
The USDA-RD mission is to help rural Alaskans                could support that strategy.
create, build and sustain ventures within communi-           Contact
ties and to see that all federal, state, nonprofit and       Division of Community and Regional Affairs
private sector programs are accessible to residents          Department of Commerce, Community and
of rural Alaska, regardless of the size of the com-            Economic Development
munity. Rural Development does this by helping               550 West 7th Ave., Suite 1770
rural individuals, communities and businesses                Anchorage, Alaska 99501-3501
obtain the financial and technical assistance needed
to address their diverse and unique needs.                   Phone: 907-269-4501
                                                             Fax: 907-465-4286
Rural Development operates federal loan and grant            Website: commerce.alaska.gov/dnn/portals/4/pub/
programs designed to strengthen rural Alaska busi-             edrg2009.pdf
nesses, finance new housing, improve existing rural
housing, develop community facilities and stimulate          Resource Guide is available on CD as an adobe ac-
rural employment. Direct and/or guaranteed loans             robat file. Please send request to the above address.
are available for housing, water and waste, rural
businesses, community facilities, electric power

                                                         7
USDA Rural Information Center (RIC)                                        Contact
The Rural Information Center (RIC) provides infor-                         Rural Information Center
mation and referral services to local, tribal, state and                   National Agriculture Library
federal government officials; community organiza-                          10301 Baltimore Avenue, Room 132
tions; rural electric and telephone cooperatives; li-                      Beltsville, MD 20705-2351
braries; businesses; and citizens working to maintain
the vitality of America’s rural areas.                                     Phone: 800-633-7701
                                                                           Fax: 301-504-5181
The RIC website contains links to current and reli-                        Website: www.nal.usda.gov/rural-development
able information on a wide variety of rural resourc-
es and funding sources, including Rural Funding
Sources and Federal Funding Sources for Rural
Areas Database.

                                             www.uaf.edu/ces or 1-877-520-5211

Anthony Nakazawa, Extension Economist, and Kathryn Dodge, Extension Economic Development Specialist
                 Published by the University of Alaska Fairbanks Cooperative Extension Service in cooperation with the United States Department of
                 Agriculture. The University of Alaska Fairbanks is an affirmative action/equal opportunity employer and educational institution.
                 ©2015 University of Alaska Fairbanks.
                 10-95/JP/3-15                                                                                         Revised September 2014
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