Arkansas

Program/Project Title: Student loans to rural Arkansas residents by
Arkansas Rural Endowment Fund, Inc.
Contact Person: Chris Lampkin, General Manager (870)723-1252 Mobile
Cost: Almost $5.3 million in loan advances per year with administrative expenses at 2.12% of the ending fund balance
Target Group: Rural Arkansas residents
Description:
Tens of thousands of individuals have benefited from receiving educational based loans since the program began in 1959. Many of these borrowers report they would have been unable to reach their educational goals without Arkansas Rural Endowment Fund (AREF) assistance. The loan recipients are distributed throughout the state, and loans are available to most Arkansas public, private, and proprietary schools for higher education. A particular focus is on trade programs for non-traditional students. All loans are private non-subsidized educational loans with low rates of interest while in school. Payments are deferred for six (6) months after completion of the program to allow time to seek employment. Afterwards, loan rates are increased during the repayment phase although they are still well below comparable market rates. The repayment period is for up to ten (10) years. Qualifications include being a U.S. Citizen and Arkansas resident for at least six (6) months at time of application. A co-maker is required on all student loans.There are numerous higher education institutions in Arkansas that have never applied to participate in the federal loan programs or have opted to discontinue participation for various reasons. This group consists of state community colleges, satellite campuses, and miscellaneous proprietary schools. These schools rely on the AREF private, unsecured loan for assistance to their students. This loan, which was initiated in 1959, earns a low interest rate (4.5% in school) with no payments required until six months after school attendance has ceased. The rate is increased to 6.0% for the repayment period. In the early years, the rates of interest charged were 3¾% in school and 6% during repayment. AREF’s experience with the private student loans has been excellent. Millions of dollars in funding for these programs has helped ensure the future work force within Arkansas.

Farm Loans Program/Project Title: Direct Farm Ownership Joint Financing Loans Funds: Joint funding of USDA FSA and AREF from available funds Contact Person: Chris Lampkin, General Manager (870)723-1252 Mobile
Target Group: Existing and future Arkansas farmers
Description:
Also known as a participation loan, joint financing allows USDA FSA to provide more farmers and ranchers with access to capital. FSA lends up to 50 percent of the cost of the property purchased. AREF funds the remaining balance taking a first lien position ahead of USDA FSA. Rates are kept low with amortizations ranging from 15-30 years depending on farm operation and assets. The maximum repayment period for the Direct Farm Ownership loan and the Joint Financing loan on FSA’s portion is 40 years.

Program/Project Title: Direct Farm Ownership Down Payment Loan Funds: Joint funding with USDA FSA and AREF with other eligible lenders as appropriate
Contact Person: Chris Lampkin, General Manager (870)723-1252 Mobile
Target Group: Beginning Arkansas farmers and/or minority and women applicants
Description:
Available only to eligible beginning farmers and/or minority and women applicants, a Down Payment loan is a special type of Direct Farm Ownership loan program that partially finances the purchase of a family size farm or ranch. Beginning farmers do not have to identify themselves as a minority or woman, and minority and women loan applicants do not have to be beginning farmers. The Down Payment Farm Ownership loan is the only FSA loan program that does not provide 100 percent financing. Down Payment loans require loan applicants to provide a minimum cash down payment of 5 percent of the purchase price of the farm. As established by the Beginning Farmer definition, loan applicants interested in the Down Payment loan may not own more than 30 percent of the average size farm at the time of the application. The applicant may exceed the 30 percent after the loan is closed. The most current Census of Agriculture data is used in this calculation. USDA FSA Maximum Loan Limitations The maximum loan amount for a Joint Financing or Participation Farm Ownership loan is $600,000. Direct Farm Ownership Down Payment maximum loan amount works differently. The maximum loan amount under this loan program will not exceed 45 percent of whichever is the lesser amount of:
• the purchase price;
• the appraised value of the farm being purchased; or
• $667,000.
The balance of the purchase price not covered by the down payment loan and applicant down payment may be financed by AREF or a commercial, cooperative, or private lender, including the seller. The financing provided by FSA and all other creditors cannot exceed 95 percent of the purchase price. An FSA guarantee may be used if financing is provided by eligible lenders with AREF purchasing a participation in the loan. The repayment term for FSA’s portion of a Down Payment loan is 20 years. The non-FSA financing portion is required to be at least a 30 year repayment period with no balloon payment allowed within the first 20 years of the loan.

Program/Project Title: FSA’s Guaranteed Farm Loan Programs
Funds: Joint funding of AREF with other eligible lenders to originate guaranteed loans
Contact Person: Chris Lampkin, General Manager (870)723-1252 Mobile
Target Group: Arkansas farmers
Description:
FSA’s Guaranteed Farm Loan Programs help family farmers and ranchers to obtain loans from USDA-approved commercial lenders at reasonable terms to buy farmland or finance agricultural production. FSA will guarantee farm loans through a commercial lender up to $2,251,000. Financial institutions receive additional loan business as well as benefit from the safety net the FSA provides by guaranteeing farm loans up to 95 percent against possible financial loss of principal and interest. AREF purchases a participation with the originating bank with the lender providing benefit from our lower rates and repayment options. This helps the originating bank keep their loan relationship while also providing liquidity for funding. The originating lender makes the loan and services it to conclusion. In the event the lender suffers a loss, FSA will reimburse the lender according to the terms and conditions specified in the guarantee.