Wisconsin Housing and Economic Development Authority

Cooperative NetworkWisconsin Credit Issues Conference

Agricultural Loan Guarantees

Cooperative NetworkWisconsin Credit Issues Conference

WHEDA Ag Guarantees

• Small Business (SBG)

• Agribusiness (AgBG)

• Farm Asset Reinvestment Management (FARM)

• Credit Relief Outreach Program (CROP)

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Authority

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

• Wisconsin Statutes Chapter 234–1972 Legislature and Governor

Create WHEDA

–1983 Expand authority to Economic Development

Authority

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

• Wisconsin Development Reserve Fund– Limited to $49,500,000

– $1 of reserve to $4.50 outstanding guaranteed principle (all programs)

– All fees are returned to the fund

WHEDA Ag Guarantees

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

• Small business– 50% up to

• Agribusiness– 50% up to

• Farm Asset Reinvestment Management– 25% up to $200,00

Credit Relief Outreach Program

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

• Credit Relief Outreach Program

– 90% up to $50,000

– 80% $50,000 - $150,000

Purpose

• To pay for services or consumable goods necessary to produce an agricultural commodity

– Crops must be planted and harvested for consumption within term of the loan

– Livestock must be purchased, fed and sold within term of the loan

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Eligibility• Unable to obtain conventional financing at

reasonable terms

• Debt-to-asset ratio is 40% or greater

• Farmer actively engaged in the farm operation

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Eligibility• Sufficient collateral to cover the CROP loan

• Wisconsin resident

• Farmer current on court-ordered payments and not in default on any WHEDA loans

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Use of Proceeds• Examples of eligible expenses include:

– Land rent, equipment rental or repair– Custom hire and direct labor costs– Crop insurance

– Fertilizer, seed, fuel, animal feed– Pesticides and herbicides

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Terms• Maximum loan amount $150,000

• 90% guarantee on annual production expenses of less than $50,000

• 80% guarantee on annual production expenses $50,000 or greater

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Terms• Maximum interest rate is Prime + 3% fixed

• Rate cannot exceed 7%

• Maturity date no later than 12 months after loan closing

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Application Process• Request to reserve a guarantee in advance of

the Note

• Review of the request and approval within 5 business days (usually 24 – 48 hours)

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Fees• Application fee equal to 1% of total

disbursements• Minimum fee of $500

• May be financed as part of the CROP loan• not guaranteed

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Prior Year Outstanding CROP Loans

• Farmer is eligible for a CROP loan after January 1st of current year

• Guarantee not in effect until previous CROP loan is paid-in-full

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Refinance• Only refinance an outstanding CROP loan from

previous calendar year

• Permitted for two consecutive years as long as at least 60% of previous CROP loan is repaid

• Deadline is June 30 of each year

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Refinance• Example:

– Year 1: $30,000 loan taken out– Year 2: $12,000 refinanced + $48,000 new dollars– Year 3: $24,000 refinanced + $36,000 new dollars– Year 4: Cannot receive new guarantee until

entire loan is repaid

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Cooperative Network Wisconsin Credit Conference WHEDA Agricultural Guarantees

Mike PowersCommunity Development OfficerBusiness DevelopmentWisconsin Housing and Economic Development Authority(608) 261-5925 office and mobileMike.Powers@WHEDA.com