Michigan Agricultural Disaster Loan Program of 2012 includes ag businesses

The Michigan Disaster Loan Program, while being promoted as assistance for fruit growers, includes processors and agricultural retailers.

The Michigan Agricultural Disaster Loan Program of 2012 website includes emergency loan funding for agricultural processors and retailers. Agricultural processors and agricultural retailers are experiencing income reductions due to a lack of raw products to process or reduced sales because farmer’s cash flows have been reduced due to freezes and drought. The maximum loan amount is the lesser of $800,000 per facility or $1,000,000 for those with multiple locations.

This is not a loan guarantee program. It is for “qualified” participants. Each lender is taking the credit risk and will use their own underwriting standards to determine each applicant’s credit worthiness.

Some of the terms and conditions of the program are:

  • One percent interest or the rate or the five year U.S. Treasury note plus .25 percent (On Aug. 6, 2012 the Treasury note rate was .59 percent).
  • These are “qualified” loans meaning they must be collateralized.
  • Five year term (interest only the first year; the principal is paid over last four years, or 25 percent per year).
  • Loans have to be entered into by March 31, 2013.

An agricultural processor is defined as “A person that is engaged and intending to remain engaged in this state in an agricultural business of buying, exchanging, processing, storing or selling farm produce that suffered a 50 percent or greater loss in volume of one commodity when compared with the average volume of that commodity that business handled in the prior three years”.

A retailer is defined as a “person in the business of making retail sales directly to farmers with 75 percent or more of the person’s gross retail sales volume exempted from sales tax under section 4a )1) (e) of the general sales tax act that suffered a 50 percent or greater reduction in gross retail sales volume subject to exemption under section 4 (a) (1) (e) of the general sales tax act … when compared with the person’s average retail sales volume subject to that exemption in the prior three years”. The reduction in sales must be directly attributed to an agricultural disaster recognized by the governor occurring after Jan. 1, 2012.

There are many program details yet to be determined. The application form will not be available until the legislature actually appropriates the $15,000,000 for the program this fall. Potential participants are asked to be patient until all of the details of the program are made available.

For more information you can contact .(JavaScript must be enabled to view this email address)., District Farm Management Educator at 231-873-2129.

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