Methane Digester Loan Program

Last updated: July 28, 2020

Program Overview

Implementing Sector:State
Category:Financial Incentive
Incentive Type:Loan Program
Web Site:
Administrator:Minnesota Department of Agriculture
Funding Source:Minnesota Rural Finance Authority (RFA)
Eligible Renewable/Other Technologies:Biomass, Anaerobic Digestion
Maximum Loan:RFA can provide up to $250,000 of loan principal
Loan Term:10 year maximum loan term, RFA portion at zero-interest


Name:Minn. Stat. § 41B.049
Date Enacted:1998
Name:Minn. Stat. § 41B.03


Methane Digester Loan Program

Established in 1998, the Minnesota Dept. of Agriculture Methane Digester Loan Program helps livestock producers install on-farm anaerobic digesters used for the production of electricity by providing zero-interest loans to eligible borrowers. The loan program is part of the Rural Finance Authority (RFA) revolving loan fund, through which farmers can receive financial aid for many different farming-related activities and improvements. The general eligibility requirements for loans through the RFA are contained in Minn. Stat. § 41B.03, which permits loans only to Minnesota residents, domestic family-farm corporations, and family-farm partnerships. The methane digester loan program is specifically authorized by Minn. Stat. § 41B.049.

In order to be eligible for a Methane Digester Loan, a borrower must:

- locate the projects and utilize the equipment and practices on land located in Minnesota;

- provide evidence of financial stability;

- demonstrate an ability to repay the loan;

- provide evidence that the practices implemented and capital assets purchased will be
properly managed and maintained; and

- not have previously received a loan under this program

Within the Methane Digester Loan Program, the RFA may make a direct loan to the borrower or act as a participant in the loan with an eligible lender (more than 400 such approved lenders exist throughout the state). State participation is limited to 45% of the loan principal in the case of participation loans and may not exceed $250,000 for either participation or direct loans. The loan term is limited to a maximum of 10 years and repayment terms for the RFA's participation interest may differ from those of the outside lender. Loans can be used as a match for federal loans and grants, but may not be used to refinance a debt existing prior to the application.

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