The purpose of the Beginning Farmer Bond Program is to provide affordable financing to new, low net worth farmers for financing capital purchases. The Illinois Finance Authority (IFA) works with the borrower's local lender to provide this financing. IFA issues a tax exempt bond for the amount and with the terms of the loan. Because the interest income to the lender is exempt from federal income tax, the lender is able to charge a lower rate to the borrower.

The loan and the bond are secured solely by the collateral required by the lender and are not obligations of IFA or of the State of Illinois. Because the lender assumes all credit risk, the lender makes all credit decisions. Loans may be used to acquire agricultural land, new depreciable property, or used depreciable property in conjunction with agricultural land.