AgStar launches minority loan program
By Janet Kubat Willette
jkubat@agrinews.com
Date Modified: 02/16/2012 9:40 AM
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ROCHESTER, Minn. — AgStar Financial Services has rolled out a new lending program geared to reaching minority farmers.
The program is available in the 69 counties in Minnesota and western Wisconsin served by AgStar.
The Minority Lending Program was developed after a survey conducted with business people in southeast and southwest Minnesota.
The survey identified a large population of immigrant farmers who are underutilized in the current economy, said David Krueger, assistant vice president of the AgStar Rural Capital Network. He spoke at the Jan. 18 meeting of the Southeast Minnesota Ag Alliance. Many work in packing plants or manufacturing jobs and want to get back to production agriculture or have part time farms, he said.
Southern Minnesota is culturally diverse, Krueger said. Olmsted County will have the fastest growing immigrant population in Minnesota over the next decade. Several cultures are represented in Worthington's business community. More than 50 percent of the students in the St. James school system are Latino. Minnesota has the largest population of Hmong and Somali people in the United States.
The survey of business people identified that local foods and organics are a growing market in southern Minnesota. Together, the two are a $4 billion business in Minnesota, Krueger said. The St. Paul and Minneapolis farmers markets generate $642 million annually. Many of the vendors are immigrant or minority farmers.
Helping the minority community reach their agricultural production goals is an opportunity to create jobs and grow the local economy, Krueger said.
The AgStar Minority Lending Program is a four-year program, Krueger said, at the end of which it's hoped participants can graduate to an Farm Service Agency loan or another type of loan.
People applying for a FSA guaranteed loan need to have acceptable credit history and the capacity to pay back the loan. AgStar's program is focused on building the applicant's skills so they can qualify.
AgStar will evaluate applicants based on several criteria and the demands will increase along with the loan amount requested. The program will be laser focused on financing. AgStar won't be writing business plans for minority farmers or helping them secure land.
Program participants will need to keep records and file taxes. They must maintain a good relationship with the lender and take continuing education credits. Interest rates will be the same as other clients based on their risk rate.
The AgStar Fund for Rural America will give $500 vouchers for one year to help participants earn educational credits. The credits can be for anything AgStar deems relevant for improving the applicant's business acumen.
AgStar will confirm the applicant is a citizen, has a green card or is a legal resident of the United States.
The company has dedicated $2 million in seed money to this program to see where it goes.
Krueger said he'd received 10 calls of interest in the first week the program was launched. He expected they would make additional contacts at the Immigrant and Minority Farmers Conference in St. Paul.
Agustin Arzeno, minority lending officer with AgStar, will be the lead loan officer on this project. Arzeno is from Argentina and speaks Spanish fluently. He may be reached at 1-855-218-1564.