Agricultural Bond Program
INSTRUCTIONS TO BORROWERS AND LENDERS
The Indiana Finance Authority ("IFA") has established its Agricultural Development Loan Program for the purpose of providing assistance to farmers in the State of Indiana. The Program will enable qualifying farmers to borrow money for suitable agricultural projects at lower cost through the use of tax-exempt financing provided by IFA. Eligible Borrowers may finance Agricultural Property (as defined hereinafter) on a tax-exempt basis by following the procedures outlined in the Program Guide to be developed by IFA. Under the Program, IFA serves as a conduit between the Borrower and a Lender in order to pass through to the Borrower the IFA's tax-exempt borrowing rate. Thus, the Borrower pays lower interest costs because the interest income received by the Lender will not be subject to federal or state income taxation. The Program does not involve any grant or direct subsidy from IFA, the State of Indiana or the United States.
"Agricultural Property" means (i) land, (ii) improvements to real estate and (iii) personal property of a character subject to depreciation, all constituting a Farm or part of a Farm in the State of Indiana.
"Borrower" means any individual or business entity including but not limited to corporations, partnerships, joint ventures, limited liability companies, etc., who receives a loan for Agricultural Property from the IFA. The term does not include a corporation if it has more than ten shareholders or if any of its shareholders is a corporation, subsidiary of a corporation or subsidiary of a subsidiary of a corporation with more than ten shareholders. The term does not include a partnership, joint venture, limited liability company, firm or association that has one or more members that are a corporation, subsidiary of a corporation or a subsidiary of a subsidiary of a corporation with more than ten shareholders.
"Farm" or "Farms" is used in its ordinary and accepted sense, and generally means land used for the production of crops, fruits, or other agricultural products or for the sustenance of livestock or poultry. The term 'livestock' includes cattle, hogs, horses, mules, donkeys, sheep, goats, and captive fur-bearing animals. The term 'poultry' includes chickens, turkeys, geese, ducks, and pigeons. Thus, a farm includes livestock, dairy, poultry, fish, fruit, fur-bearing animal, and truck farms, plantations, ranches, nurseries, ranges, orchards, feed yards for fattening cattle, and greenhouses and other similar structures used primarily for the raising of agricultural or horticultural commodities. Greenhouses and other similar structures that are used primarily for purposes other than the raising of agricultural or horticultural commodities do not constitute farms, as for example, structures that are used primarily for the display, storage, fabrication, or sale of wreaths, corsages, and bouquets. A fish farm is an area where fish are grown or raised, as opposed to merely caught or harvested.
"Lender" means any institution qualified in the State of Indiana to originate and service Loans.
Who Is Eligible?
Those eligible include any Borrower who is an Indiana resident or business entity qualified to do business in Indiana.
What May Be Financed?
IFA may currently finance land, real estate improvements and personal property of a character subject to depreciation, all of which are used as Agricultural Property. IFA may not finance any of those portions of the qualifying items mentioned above if the Borrower has paid or incurred costs for such portions more than sixty (60) days prior to the adoption by IFA of an Inducement Resolution relative to the Agricultural Property and the Borrower. Also, IFA may not finance working capital, inventory or dwellings.
How Large May Any Loan Be?
IFA will issue bonds, the proceeds of which may be lent to Borrowers for financing Agricultural Property in principal amounts no smaller than twenty-five thousand dollars ($25,000) and no larger than five hundred one thousand dollars ($501,000). No more than two percent (2%) of the face amount of any Bond may be used to finance costs of issuing such Bond.
How Long May Any Loan Extend?
The term of the Loan may in no case exceed twenty-five years and may be shorter under federal law.
What Is The Interest Rate?
The rate of interest on any Loan may be any fixed rate or variable rate negotiated between Borrower and Lender so long as it is consistent with the basic format of the Program.