Beginning Farmer Loan

The Colorado Agricultural Development Authority (CADA) loan program is known as the Beginning Farmer Program. The program involves a three-way transaction between the lender, the borrower and CADA. Through the issuance of a tax exempt bond by CADA to the lender, all interest paid by the borrower is tax exempt. The result is an interest rate to the borrower below commercial rates.

Because interest paid to the lender under this program is tax-exempt, the lender should be willing to charge interest rates substantially below commercial rates.

Key points of the Beginning Farmer Program

  • Borrower must be a Beginning Farmer which is defined as an individual who has never owned farmland which is equal to or greater than 30 percent of the median county farm acreage

  • Funds can only be used for the purchase of agricultural land and depreciable agricultural property
  • The maximum which can be borrowed is $500,000
  • Borrower must be approved by a lender
  • Loans are not guaranteed by the government or by CADA
  • The borrower and lender must mutually agree upon the terms of the loan (i.e. interest rate, length of loan)
  • Interest rates can be either fixed or floating
  • Loan applications must be approved by CADA within 60 days of any payments made on the project
  • No portion of the loan may be used for a personal residence