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Next Generation Farm Loan Program (NGFLP)

Tax Exempt Mortgage for Transfer of Working Farms to New Farmers
General Information 

The purpose of the Next Generation Farmer Loan Program is to provide an effective means for federal-state-industry linkages, whereby the public sector can assist beginning and first time farmers to purchase land, farm equipment, farm buildings and breeding livestock.    

The program uses federal tax exempt mortgage financing to reduce a farmerâs interest rate for capital purchases. The program may be used between a borrower and lender for a loan to make a direct purchase of farm and agricultural machinery and equipment or between a buyer and seller for a contract purchase. The tax exempt interest income to the lender or contract seller enables them to charge the borrower lower interest rate, which is exempt from federal, state and county taxes that would be applicable.    

Eligibility     
  • Credit Quality. The applicant must meet the lender's credit standards.
  • Residency. The applicant must be a permanent resident of Pennsylvania when the loan is issued. 
  • Age. The applicant must be at least 18 years of age when the loan application is submitted. 
  • Capital Requirements. The applicant will be required to document to the satisfaction of the lender that they will have access to adequate working capital, farm equipment, and livestock, if appropriate. 
  • Ownership and Active Participation. The applicant must be the sole owner and principal user of the project. 
  • Prior Ownership of Agricultural Land. The applicant must not have had any prior direct or indirect ownership interest in a substantial amount of land. 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, or which had at any time during ownership a fair market value in excess of $125,000. 
  • Ownership or material participation by an individualâs spouse or minor child shall be treated as ownership or material participation by an individual. The maximum loan amount is $250,000 per person. Loan proceeds may be used for the following Capital purchases only:   

Agricultural Land. Land located in the Commonwealth of Pennsylvania that is suitable for use in farming and which is or will be operated as a farm. 

Agricultural Improvements. Any improvements, buildings, structures or fixtures suitable for use in farming which are located on agricultural land. The Program will finance the purchase of new improvements on agricultural land, and used agricultural improvements only in situations in which: 

The improvements are purchased in conjunction with agricultural land and used in the operation of a farm to be operated on the agricultural land being purchased; or 

A sufficient amount of qualified rehabilitation expenditures are incurred by the borrower with respect to the agricultural improvements within two years from the date of issue of the loan. 

Fees 

Charges by Industrial Development Authority include a non-refundable $750.00 application fee, a 1% loan-packaging fee, as well as legal fees charged by IDA's counsel at the time of closing.