I would exempt this as an ag loan because the purpose is purchasing property to be primarily used for ag purposes.

If the purchaser later refinances the loan then you will have to look to the primary purpose for the refinancing and not the use of the land. Like the RV purchase mentioned earlier.

I agree.

Thanks!

I'm not trying to be the contrarian, here, but I still don't see the situation VG describes as ag purpose credit. The immediate purpose of the loan is to facilitate the purchase of land plus a cabin. The OSC to Section 226.3(a), #6 says that the direct purpose of the credit must involve
- planting
- propagating
- nurturing
- harvesting
- catching
- storing
- exhibiting
- marketing
- transporting
- processing
- manufacturing
of food or a wide range of other agricultural products.

To me, the OSC says "working capital." Very likely, this applicant will not claim to be involved in any of these activities in the "loan purpose" section of the credit application. Also, it's unlikely that the credit agreement will specify that the proceeds must by used for one of the exempt purposes. Finally, it's safe to say that none of the proceeds will actually be used to plant corn or feed cattle.

This borrower's primary motivation is to acquire recreational property. Renting some of the land to offset carrying costs is incidental to the primary purpose.