Drought Relief Guarantee Program
In July 2012, Governor Scott Walker declared a state of emergency for all 72 Wisconsin counties due to drought or abnormally dry conditions.
In response, WHEDA will provide $1.5 million in loan guarantees to help farmers in need. WHEDA’s Drought Relief Guarantee Program will provide a 90% guarantee on loans up to $15,000 for three years. WHEDA will also provide an interest reduction payment to its lender partners which will allow for a lower interest rate loan for drought-affected farmers.
Use of proceeds
To provide assistance for extraordinary drought related costs related to:
- Fertilizer, seed, fuel, pesticides, tillage services, crop insurance, and other service or consumable good necessary to replace or supplement an agricultural commodity adversely affected by drought.
- Water delivery in connection with agricultural commodities adversely affected by drought.
- Feed and associated expenses for animals to supplement feed supplies adversely affected by drought.
- Farmer does not meet lender’s eligibility requirements for an assistance loan.
- Farmer’s debt-to-asset ratio is at least 40%
- Farmer’s assets, cashflow and managerial ability are sufficient to preclude voluntary or involuntary liquidation before the end of the term loan
- Farmer is expected to lose 40% or more of their crops because of the drought conditions
- The applicant individual or entity must be actively engaged in the farming operation
- Farmer is current in child support payments and not in default on any WHEDA loans
Terms and conditions
- Maximum loan amount is $15,000
- Guarantee term is 3 years
- Guarantee is 90%
- A one-time interest reduction payment of 3.5% is paid to the lender
- Maximum interest rate to borrower is WSJ Prime + 2% on day of loan closing (ceiling of 7%), fixed for loan term, less the interest reduction payment of 1.167% (determined by taking the 3.5% interest reduction payment averaged over three years)
- Maturity date is three years from the date of the note, but lender may extend to five years with notice. However, the guarantee does not extend beyond 3 years
- Proceeds cannot be used to pay off or refinance other loans
- Loan must be secured
- Loan may be amortizing or interest only
- Farmers need to contact a WHEDA agricultural lender
- Lender and farmer complete the Drought Guarantee Application
- Submit complete application package to WHEDA, including application fee, within 30 days of note date
- WHEDA reviews the complete application and renders a decision within five business days
- Applications will be accepted through December 31, 2012
- Non-refundable application fee:
Questions? Please contact WHEDA’s Economic Development Department at 800-334-6873 or email@example.com. Check back to this website for further program updates and application information.