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Beginning Farmer Bond Program

The South Dakota Beginning Farmer Bond Program (SDBFBP) is a tax-exempt bond program designed to assist Beginning Farmers in the state of South Dakota to acquire agricultural property at lower interest rates.

The Program enables lenders, individuals, partnerships, corporations, and other entities (herein referred to as the “Bond Purchaser”) to receive federally tax-exempt interest with respect to a loan or contract sale made to Beginning Farmers. The Bond Purchaser, after arranging the loan or sales contract, will obtain from the South Dakota Economic Development Finance Authority (the “Authority”) a federally tax-exempt Private Activity Bond (PAB) in the amount of the loan or unpaid balance. The loan and its collateral will be assigned to the Bond Purchaser as security for the bond. In the case of a contract sale, the contract will be entered into by the Authority, and the Bond Purchaser will receive the bond to evidence the Authority’s obligations under the contract. The Authority’s right, title and interest in the contract will then be assigned to the Beginning Farmer who assumes payment obligations of the Authority under the contract.

How It Works

The program enables lenders and qualified beginning farmers to save on interest by using federally tax-exempt bonds on loan amounts up to $600,000.

Use of Funds

Real Estate, depreciable property and breeding livestock


Bond purchaser, usually the lender, sets rates and terms; can also work with contract sellers that aren’t parents/grandparents.

South Dakota Governor’s Office of Economic Development

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