Agricultural Financing Program

Next Generation Farmer Loan (NGFLP)

Email Lyle Hosler or call him at 717-397-4046 for additional information or with questions.

Loan program for beginning or first-time farmer projects
A lending institution provides a tax-exempt mortgage to the borrower. Interest earned by the bank is exempt from Federal and State Income taxes. The bank, in turn, passes on a lower interest rate to its borrower.
Lancaster County's contact for the NGFLP is EDC Finance Corporation

Beginning or first-time farmers who are purchasing farmland and meet the following criteria:

No prior direct or indirect ownership interest in a substantial amount of farmland. A substantial amount of land is a parcel, which exceeds 30% of the median farm size in the county in which the land is located.
Must be the sole owner and user of the project
Must be a permanent resident of Pennsylvania and at least 18 years of age
Sole proprietor net worth of < $500,000
Partnership net worth < $1 million.
Must meet bank's credit standards

Funds can be used to purchase property from related persons. The IRS states that the following, among others, are "related persons:" grandfather, grandmother, father, mother, brother, sister, child, grandchild or spouse. In addition, a partnership and each of its partners (and their spouses and minor children) are related persons, as are an S corporation and each of its shareholders (and their spouses and minor children.) The following are not considered as related persons: aunt, uncle, nephew, niece, brother-in-law or sister-in-law.
If loan proceeds are used to purchase property from a related person, the applicant must certify and provide supporting documentation that the purchase price of the property is at least equal to the market value of the project. The applicant must also certify that the seller will have no continuing financial interest in the project and will not be a principal user of the project, and will have no other direct or indirect ownership of the project.

No minimum
Tax-exempt loan up to $488,000 (effective January 2012) per person/couple/partnership provided by the applicant's bank for land and related asset purchases
Tax-exempt loan proceeds for purchase of used equipment may not exceed $62,500
Borrowers can combine other loans with the NGLP to complete the project financing package.

Tax-exempt bank interest rate
Bank sets term and provides funding
Usually the rate is established at 70-80% of the bank's agricultural loan rate. The term is normally 15-25 years for real estate loans and 5-7 years for equipment and machinery.
All fund uses must be associated with agricultural land being acquired
Value of residence is ineligible
Related party farm must be purchased at an agricultural use maket rate