What fruit growers need to know about the Michigan Agricultural Disaster Loan

This new program creates short term, low interest loans for qualified borrowers.

Michigan fruit farmers have experienced threats to the viability of their businesses from spring frosts. In response to these unprecedented events, the Michigan Legislature crafted this emergency loan package, Michigan Agricultural Disaster Loan Origination Program Act of 2012, was signed by Gov. Rick Snyder on Jun. 28, 2012.

Some of the terms and qualifications of the 2012 Fruit Freeze Disaster program are:

  • 25 percent loss across the farm in the “major enterprises” or production loss of 50 percent on one crop for a farm
  • Losses certified by signed affidavit
  • One percent interest or the rate of the five-year U.S. Treasury note plus .25 percent. (On Aug. 6, 2010 the Treasury note rate was .59 percent)
  • Five year term (interest only the first year; the principal is paid over last four years, or 25 percent annually)
  • These are “qualified” loans meaning they must be collateralized
  • Loans have to be entered into by Mar. 31, 2013

The maximum producer loan is $400,000, or the value of the crop loss, whichever is less; minus the value of insurance proceeds. If crop insurance was available, but not purchased, the loan is reduced 30 percent or $100,000 whichever is less.

This is not a loan guarantee program or a grant to offset production losses. It is a state supported special term operational loan for “qualified” fruit farm producer participants. Each participating agricultural lender is taking the credit risk and will use their own underwriting standards to determine each applicant’s credit worthiness. The $15 million authorized to be contributed by the State of Michigan is to pay the lenders for administrative costs and loan origination fees. Greenstone Farm Credit Services and Huntington Bank plan to be the participating lenders.

The Michigan Legislature has not yet appropriated the $15 million to fund this program. The funding is expected early this fall. Subsequently, the loan application form and application instructions should be available. Potential participants are asked to be patient until all of the details of the program are made available. Now is the time to be getting your financial records and documents in order so you are ready to apply.

For more information contact Curtis Talley Jr., district farm management educator at 231-873-2129.

Related Michigan State University (MSU) Extension News article: Michigan Agricultural Disaster Loan Program of 2012 includes ag businesses

Additional Information

MSU Extension’s 2012 Fruit Freeze Resources

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