Purpose

This bill would provide funding from state bonds to expand and support loan programs for farmers. It aims to help the Rural Finance Authority (RFA) increase lending to farmers through participation loans or direct loans, by using bond money authorized by Minnesota’s constitution and state laws.

What the bill would do (Main provisions)

• Appropriation to the Rural Finance Authority:
  • Provides $30,000,000 from the bond proceeds fund to the RFA.
  • Uses include loans and loan participations under programs authorized in Minnesota Statutes Chapter 41B:
  • Beginning farmer program (41B.039)
  • Loan restructuring program (41B.04)
  • Sellersponsored program (41B.042)
  • Agricultural improvement loan program (41B.043)
  • Livestock expansion and modernization loan program (41B.045)
  • Debt service for this financing must be repaid by the RFA, following state law.
  • Loan participations must be priced to provide full interest and principal coverage and set aside a reserve for potential losses.
  • Priority for loan issuance: 1) basic beginning farmer loans 2) seller-sponsored loans 3) agricultural improvement loans
• Bond sale expenses:
  • An additional $30,000,000 is appropriated from the bond proceeds fund to the Commissioner of Management and Budget for bond sale expenses (as allowed by state law).
• Bond sale authorization:
  • The state would issue bonds up to approximately $50,050,000 to fund these programs, under the applicable statutes and constitutional provisions.

Significant changes to current law

• Creates a dedicated, large bond-funded appropriation to expand several specific farm loan programs administered by the Rural Finance Authority.
• Establishes a defined loan priority order for new loans (beginning farmers first, then seller-sponsored, then agricultural improvement loans).
• Requires debt service on this bond-financed program to be paid back by the RFA, aligning with existing debt repayment rules.
• Sets requirements for how loan participations are priced and the creation of loss reserves.

Implementation notes (how it would work)

• The money comes from the bond proceeds fund and would be used by the RFA to purchase loan participations or make direct loans under the listed programs.
• The RFA would manage loan pricing to ensure the loans cover interest, principal, and possible losses, plus set aside reserves.
• The project would require selling up to about $50.05 million in state bonds to fund these activities, with separate funds allocated for bond sale expenses.

Relevant authorities and references

• Minnesota Constitution Article XI (funding and debt provisions)
• Minnesota Statutes Chapter 41B (Rural Finance Authority loan programs)
• Minnesota Statutes sections 16A.641, 16A.643 (bond sale process, debt service)
• Specific loan program sections: 41B.039, 41B.04, 41B.042, 41B.043, 41B.045

Relevant Terms - Rural Finance Authority (RFA) - bond proceeds fund - Rural Finance Administration Fund - beginning farmer program (41B.039) - loan restructuring program (41B.04) - seller-sponsored program (41B.042) - agricultural improvement loan program (41B.043) - livestock expansion and modernization loan program (41B.045) - loan participations - direct agricultural loans - debt service - price to provide full interest and principal coverage - reserve for potential losses - basic beginning farmer loans - Minnesota Statutes 16A.641, 16A.643 - Minnesota Constitution Article XI - bond sale expenses