Missouri Value-Added Loan Guarantee Program
The Missouri Value-Added Loan Guarantee Program provides a 50% first-loss guarantee to lenders who make agricultural business development loans for the acquisition, construction, improvement, or rehabilitation of agricultural property used for the purpose of processing, manufacturing, marketing, exporting, and adding value to an agricultural product.
A qualifying agribusiness is defined as any business whose primary customer base is producers of agricultural goods and products or any business whose function is the support of agricultural production or processing by providing goods and services used for producing or processing agricultural products.
Agricultural property includes:
- Guarantees may also be made on loans to buy stock in a start-up cooperative that processes an agricultural product, and
- Plant stock for grapes which will be processed into wine
How Does the Program Work?
Borrowers wishing to secure a loan through the loan guarantee program must:
- Apply for a loan with a bank, savings & loan, or Farm Credit System lender
- The participating lender must decide whether a prospective borrower meets its requirements for a loan if a 50 percent first-loss guarantee is provided through the Missouri Value-Added Loan Guarantee Program
- After deciding to make a guaranteed agricultural business development loan, the lender must submit an application to the authority
Who is Eligible?
- Borrowers must be legal Missouri residents who are at least 18 years old
- Partnership, corporation, firm, cooperative, association, trust, political subdivision, state agency or other legal entity executing a note or other evidence of an agricultural business development loan
- The project must be located in Missouri
Loan Amount and Terms
- Loans made under the guarantee program may be for an amount up to $250,000 with a loan guarantee available for up to 10 years
- The interest rate charged to a borrower will be negotiated between the lender and the borrower, but cannot exceed the rate normally charged by the lender for similar loans
- A borrower must provide at least 10 percent of the cost of the project as down payment
- A borrower must provide a first deed of trust or lien on the financed property
- Loan proceeds may not be used for producing livestock or agricultural crops except for grapes to be processed into wine
- Borrower must be able to provide proof of citizenship, identity and legal Missouri residence. If the borrower employs laborers, he/she must also provide proof of enrollment and participation in the federal work authorization program.
At the time of closing, the lender will pay or have the borrower pay a one-time loan participation fee of one percent. Additionally, a loan guarantee fee of one-half of one percent of the outstanding principal is due at closing and annually thereafter on agricultural business development loans and on stock purchase loans of over $50,000 as long as the guarantee is in effect. No annual loan guarantee fee is due on stock purchase loans of $50,000 or less.
Borrowers qualifying for the Missouri Value-Added Loan Guarantee Loan Program may also qualify for the Missouri FIRST Program administered by the state treasurer’s office. The Missouri FIRST Program makes funds available at reduced interest rates to lenders who in turn pass the savings along to agricultural business development loan borrowers. To find out more about the Missouri FIRST Program, call the state treasurer’s office at (573) 751-2372 or visit their website at www.treasurer.mo.gov.
Prior to a loan loss payment being made, the lender shall provide proof of compliance (copy of MOU) with the federal work authorization program (E-verify).
The authority also administers the Missouri Value-Added Grant Program.