Loan Interest-Share Program
The program, developed by the state’s Soil and Water Districts Commission in the Missouri Department of Natural Resources, refunds a portion of the interest expense on loans used either to reduce erosion or to reduce the potential for erosion.
The loan interest-share program requires the participation of local lending institutions. The program does not, however, dictate credit terms nor interfere in agreements made between borrowers and lenders. The program, moreover, does not involve government-sponsored or government-guaranteed loans. Funds for the program come from the one-tenth-of-one-percent Parks and Soils Tax approved by voters in 1984.
How does the program work?
Landowners who are able to secure loans through traditional lending institutions may apply to their local Soil and Water Conservation Districts for program assistance. The program application, signed by the landowner and lender, is forwarded to the district board for approval. If approved, the application is sent to the commission for further approval. The loan then can be finalized by the lender. Once the loan is finalized, the landowner can use the loan to establish those conservation practices listed in the program application.
The state refunds a portion of the landowner’s interest expense at the end of each year of program participation. The refunds are issued each 12 months following program enrollment. This refund, however, may not exceed the interest rate earned by the state in its general investment program. Since the landowner’s principle and interest levels decline over the term of the loan, the annual state refund of interest to the landowner in the latter years of the loan will be 100%.
Each year, the lender must certify that interest was paid. The Soil and Water Conservation District technician also must certify that specified practices are being maintained and that the agreement requirements have been met.
Who may participate?
Landowners or their legal representatives may participate in any Missouri Soil and Water Conservation District program. In addition, operators who are not landowners may use the program to purchase no-till equipment. Eligible participants must have developed a conservation plan for the land they control.
What are maximum loan levels that may be covered through
Interest-Share?
To qualify, a landowner must have a minimum loan of $2,500. The maximum is $25,000. The maximum length of time that a loan may be scheduled in the program is 10 years (5 years for equipment purchases). The actual length may be less, however, depending upon the loan agreement between the lender and the borrower.
What will variable interest rates do to the average
annual interest rate?
Variable interest rates will change the loan interest rate
each year. The program must assume a simple-interest, straight-line payback of
the loan. However, this assumption and the sample schedule below should not in
any way affect the credit terms of the actual loan. If a landowner does not
reduce the principle as scheduled, then his annual interest payments will be
greater. At the end of interest-share program participation, there will be no
state rebate on interest payments.
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SAMPLE LOAN SCHEDULE |
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YEAR |
PRINCIPLE |
INTEREST RATE |
LANDOWNER INTEREST PAID |
STATE INTEREST |
INTEREST REFUND |
NET LANDOWNER INTEREST |
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1 |
$ 10,000.00 |
12.50% |
$ 1,250.00
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5.88% |
$
588.00 |
$
662.00 |
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2 |
$ 9,000.00
|
11.50% |
$ 1,035.00
|
6.40% |
$
640.00 |
$
395.00 |
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3 |
$ 8,000.00
|
14.00% |
$ 1,120.00
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6.70% |
$
670.00 |
$
450.00 |
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4 |
$ 7,000.00
|
13.50% |
$
945.00 |
6.22% |
$
622.00 |
$
323.00 |
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5 |
$ 6,000.00
|
12.50% |
$
750.00 |
7.02% |
$
702.00 |
$
48.00 |
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6 |
$ 5,000.00
|
13.00% |
$
650.00 |
7.44% |
$
650.00 |
$
- |
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7 |
$ 4,000.00
|
11.00% |
$
440.00 |
6.14% |
$
440.00 |
$
- |
|
8 |
$ 3,000.00
|
10.50% |
$
315.00 |
5.78% |
$
315.00 |
$
- |
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9 |
$ 2,000.00
|
11.50% |
$
230.00 |
5.99% |
$
230.00 |
$
- |
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10 |
$ 1,000.00
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12.00% |
$
120.00 |
6.06% |
$
120.00 |
$
- |
Total interest paid without reimbursement: $ 6,855.00
Total interest paid with reimbursement: $ 1,878.00
What practices are eligible?
Any standard erosion control practices qualify. Interest-sharing, however, is not allowed on a loan for the for the landowner’s share of a practice cost-shared under any other government program. Examples of other eligible practices include construction of pasture-management facilities such as cross fencing and water distribution; noxious weed control and pasture conversions; construction of animal waste-management facilities; and the purchase of new or used no-till drills, no-till planters, small scrapers or attachments that convert conventional machinery to no-till equipment.
What specific items are not eligible?
The landowner’s share of a cost-shared practice is not eligible. Other ineligible practices include landowner labor charges; maintenance, operation or repair costs; farm equipment other than no-till drills, no-till planters and small scrapers; irrigation well, pumps or systems; recreational uses; land purchases; and costs associated with converting forest land to more intensive uses.
Where can I find more information on the Loan
Interest-Share program?
Visit your local Soil and Water Conservation District office. They can help you apply for the program.
This
information made available by:
.
Missouri Department
of Natural Resources