AgBMP Loan Program
Farmers, Rural Landowners, and Agricultural Supply Businesses
The AgBMP Loan Program provides needed funding for local implementation of clean water practices at an extremely low cost, is unique in its structure and is not duplicated by any other source of funding.
The AgBMP loan program provides 3% loans through local lenders to farmers, rural landowners, and agriculture supply businesses. Funds are used for proven practices that prevent non-point source water pollution or solve existing water quality problems.
The program provides low interest financing for capital improvements that improve water quality through:
- Feedlot Improvements
- Conservation Tillage Equipment
- Septic System Replacements / Upgrades
- Erosion Control Structures
- Shoreline Stabilization
- Wetland Restoration
This program helps landowners purchase equipment that results in less erosion and/or runoff to rivers and streams. It helps landowners fix septic systems that are discharging to surface or groundwater. It provides funds to seal old wells and relocate new wells in areas that are less environmentally sensitive. It helps landowners fix and stabilize gullies, waterways, shorelines and riverbanks. Any practice that solves a water quality problem is eligible!
There are many great attributes of the AgBMP Loan program:
- Loans support local implementation of conservation practices
- Loans fund proven practices that improve water quality
- Loans can be used with cost share programs and funds are available statewide
- The cost to the state is very low, averaging less than $200 per loan in administrative costs
- The AgBMP loan program is a revolving fund, money is used, repaid and used again and again to provide a perpetual funding source for continued financing of more projects to support conservation
Every loan is issued from just one of five sources of funds. This includes both federal and state sources. All loans supported by the Clean Water Fund must be used to implement recommended practices identified in a Minnesota Pollution Control Agency (MPCA) approved Total Maximum Daily Load (TMDL) Implementation Plans. All other appropriations in the AgBMP account and their revolving revenue may be used anywhere is the state.
This program bases the eligibility of practices on recommendations of the University of Minnesota, MPCA, Minnesota Department of Agriculture, United States Department of Agriculture-Natural Resources Conservation Service (USDA NRCS), and the knowledge and skills of local government unit staff including the county Environmental Office, county feedlot officers, local water planners, local Soil and Water Conservation Districts, and consulting engineers.
The AgBMP Loan Program is based on implementing recognized and demonstrated best management practices recommended in environmental plans such as the Local Comprehensive Water Management Plans, Total Maximum Daily Load (TMDL) Implementation Plans, and the State 319 Nonpoint Source Management Plan. These practices have been shown to be effective by researchers, University Extension, state & federal agencies, and industry Research & Development.
About the Issue
The Minnesota Department of Agriculture provides the loan funds to local lenders. The lender is the fiscal agent, they are responsible to disburse the loans, service the loans, collect repayments, and guarantee those repayments back to the program. The Soil and Water Conservation District (SWCD) or County Environmental Office is the local administering agency (see image under Media).
Since MDA provides only loans and the loans are fully guaranteed and always repaid, all funds provided by the AgBMP Loan Program are considered leverage. Ultimately, there are no state funds in an AgBMP loan.
The AgBMP loan program does not offer grants; the assistance is in the form of a loan that must be repaid and the repayments are then reused again and again to provide a perpetual funding source for continued financing of more projects. This is referred to as a revolving loan account structure.
As of May,1 2013 the AgBMP Loan Program used Clean Water Fund dollars to support 337 loans totaling an amount of $6,780,799. Sixty-four loans were for agricultural waste management projects, 258 for septic systems upgrades or relocation and 15 for conservation tillage equipment. At this time the program has leveraged 48% of the total cost of projects. Overall, Clean Water funded Ag BMP loans have leveraged $6,354,833.
Project Details by Fiscal Year
Competitive Grant Making Body