Rural Finance Authority Revolving Loan Account
Like Minnesota's Agricultural Improvement Loan Program, this is a "participation loan" program, where loans are made by individual financial institutions working with the Rural Finance Authority (RFA). The RFA purchases up to 45% of the loan principal up to $40,000. The participant negotiates an interest rate, which may be a variable or fixed rate, for the non-RFA portion of the loan with a lender. The interest rate offered by the RFA is then set at a fixed rate of the lesser of 4.0% or half the lender's effective rate at closing. Loans are for a maximum of 8 years, and interest-only payments are permitted for the first 2 years. Interest and loan principal repayments are deposited back into a revolving loan account. The RFA is not permitted to make stock loans cumulatively totaling more than $2 million for the financing of stock purchases in any one cooperative.
The program will not finance more than 95% of the price of the stock purchased by the participant. To qualify, an applicant must have a total net worth of less than $450,000 (indexed for inflation), including the assets and liabilities of the applicant's spouse and dependents.