Current Rates

Agribusiness Loans

Fuel Your Agricultural Growth

From acquiring land to purchasing machinery, the SBA 504 Loan offers a long-term, fixed rate financing option to help new or expanding agribusiness operations. Benefit from lower down payment requirements and financing for up to 90% of the cost of your project, allowing you to conserve valuable operative capital of your business.

Projects That May Qualify for SBA 504 Financing

  • SBA 504 Loans can be used to finance a variety of ag-related projects, including:
  • Dairy farm start-up and expansion
  • Hog farrow-to-finish facilities
  • Irrigation equipment
  • Livestock feed lots
  • Livestock sales arenas
  • Seed operations and seed treatment plants
  • Grain elevators
  • Bean and potato warehousing and processing facilities
  • The portion of these 504 financing packages provided by the SBA may be used to assist with a variety of fixed asset projects, including:
  • Facility acquisition, construction, renovation or expansion, including the purchase of land specifically related to the agribusiness venture. This may include land and site improvements.
  • Processing machinery and equipment. (“Rolling stock” excluded.)
  • Interest on interim financing.
  • Professional fees directly attributable and essential to the project—surveying, engineering, architectural or legal.

Projects That DO NOT Qualify for SBA 504 Financing

  • The end use of the project determines whether it will qualify for SBA 504 financing or not. Some projects that do not qualify for SBA 504 loans include:
  • Seed, fertilizer, livestock, or feed production expenses
  • “Moving equipment,” including tractors, motorized implements, and airplanes
  • The purchase of cropland or pasture
  • Agribusiness projects will be reviewed for eligibility on a case-by-case basis. Potential applicants are urged to discuss their needs with Ally Dakota Development early in their planning process.
  • If financing is not available from non-federal sources on reasonable terms, an agribusiness may qualify for SBA 504 financing by meeting several criteria:
  • It must be a for-profit entity (corporation, LLC, LLP, partnership, proprietorship, or a producer cooperative) and must have a sound business purpose
  • The net worth of the business and its affiliates must not exceed $20 million. Its average net income (after taxes) must not exceed $6.5 million for the last two years

Loan Structure

  • A complete 504 financing package is a combination of at least three sources: Ally Dakota Development (SBA 504), borrower equity and a local financial institution.
  • Through Ally Dakota Development, the SBA may loan up to 40 percent of the total project cost, for a minimum of $50,000 and a maximum of $5,000,000
  • The agribusiness receiving the financial assistance must inject at least 10 percent of the total funds for any project (and in some cases up to 20%). This can be in the form of cash or land already owned
  • The balance—usually 50%—is provided by the local financial institution

Terms & Requirements

  • Terms
    The SBA 504 program offers terms of 10 years for machinery and equipment loans, and 20 or 25 years for real estate loans.
  • Collateral and Security
    The borrower must provide collateral to secure the loan. This will include a mortgage on the land and building being financed; liens on machinery, equipment and fixtures; lease assignments; and personal guarantees from individuals with 20% or more ownership in the company (or limited guarantees from those with less than 20% ownership). The local financial institution has the security of the first lien on the collateral, with Ally Dakota Development holding the second lien.
  • Interest
    Interest rates are generally below market rates. The interest rate is determined at the time the loan is closed after project completion and is fixed throughout the term of the loan.
  • Interim Financing
    Funding of the 504 portion of the loan package usually takes place about six weeks to two months after the project is completed. This means that interim financing is required, usually by the local financial institution that holds the first mortgage; the lender advances capital as the project begins and is repaid from the proceeds of the SBA debentures.
  • Fees
    A one time processing fee, which can be financed with the 504 loan proceeds and an ongoing servicing fee that is included in the effective loan interest rate.
  • Repayment and Prepayment
    Loan repayment begins on the first day of the month following the sale of debentures. A prepayment penalty applies during the first half of the loan term, starting at 100 percent of the debenture interest rate and declining to zero at the midlife of the loan.

Current Rates

10-Year Rate

December 2024

6.52%

20-Year Rate

December 2024

6.20%

25-Year Rate

December 2024

6.13%

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