BUSINESS LOAN AGREEMENT
Principal - $2,500,000.00  Loan Date - 04/25/2003  Maturity 02/28/2004
Loan No. -  70290

References in the shaded area are for Lender's use only and do not limit
the applicability of this document to any particular loan or item.
Any item above containing "***" has been omitted due to text length
limitations.

Borrower: ART'S-WAY MANUFACTURING CO., INC.
(TIN: 42-0920725)
HWY 9 WEST, PO BOX 288
ARMSTRONG, IA 50514-0288

Lender:   WEST DES MOINES STATE BANK
MAIN BANK
1601 22ND STREET
WEST DES MOINES, IA 50266
(515) 222-2300

THIS BUSINESS LOAN AGREEMENT dated April 25, 2003, is made and executed
between ART'S-WAY MANUFACTURING CO., INC. ("Borrower") and WEST DES
MOINES STATE BANK ("Lender") on the following terms and conditions.
Borrower has received prior commercial loans from Lender or has applied
to Lender for a commercial loan or loans or other financial accommodations,
including those which may be described on any exhibit or schedule attached
to this Agreement ("Loan").  Borrower understands and agrees that:
(A) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements as set forth in
this Agreement; (B) the granting, renewing, or extending of any Loan by
Lender at all times shall be subject to Lender's sole judgment and
discretion; and (C) all such Loans shall be and remain subject to the
terms and conditions of this Agreement.

TERM.  This Agreement shall be effective as of April 25, 2003, and
shall continue in full force and effect until such time as all of
Borrower's Loans in favor of Lender have been paid in full, including
principal, interest, costs, expenses, attorneys' fees, and other fees
and charges, or until such time as the parties may agree in writing
to terminate this Agreement.

CONDITIONS PRECEDENT TO EACH ADVANCE.  Lender's obligation to make the
initial Advance and each subsequent Advance under this Agreement shall
be subject to the fulfillment to Lender's satisfaction of all of the
conditions set forth in this Agreement and in the Related Documents.

Loan Documents.  Borrower shall provide to Lender the following
documents for the Loan: (1) the Note; (2) Security Agreements granting
to Lender security interests in the Collateral; (3) financing statements
and all other documents perfecting Lender's Security Interests;
(4) evidence of insurance as required below; (5) guaranties;
(6) together with all such Related Documents as Lender may require
for the Loan; all in form and substance satisfactory to Lender and
Lender's counsel.

Borrower's Authorization.  Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note
and the Related Documents.  In addition, Borrower shall have provided
such other resolutions, authorizations, documents and instruments as
Lender or its counsel, may require.

Payment of Fees and Expenses.  Borrower shall have paid to Lender
all fees, charges, and other expenses which are then due and payable
as specified in this Agreement or any Related Document.

Representations and Warranties.  The representations and warranties
set forth in this Agreement, in the Related Documents, and in any
document or certificate delivered to Lender under this Agreement
are true and correct.

No Event of Default.  There shall not exist at the time of any Advance
a condition which would constitute an Event of Default under this
Agreement or under any Related Document.

REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants
to Lender, as of the date of this Agreement, as of the date of each
disbursement of loan proceeds, as of the date of any renewal, extension
or modification of any Loan, and at all times any Indebtedness exists:
Organization.  Borrower is a corporation for profit which is, and at
all times shall be, duly organized, validly existing, and in good standing
under and by virtue of the laws of the State of Iowa.  Borrower is duly
authorized to transact business in all other states in which Borrower
is doing business, having obtained all necessary filings, governmental
licenses and approvals for each state in which Borrower is doing business.
Specifically, Borrower is, and at all times shall be, duly qualified as
a foreign corporation in all states in which the failure to so qualify
would have a material adverse effect on its business or financial condition.
Borrower has the full power and authority to own its properties and to
transact the business in which it is presently engaged or presently proposes
to engage.  Borrower maintains an office at HWY 9 WEST, PO BOX 288,
ARMSTRONG, IA 50514-0288.  Unless Borrower has designated otherwise in
writing, the principal office is the office at which Borrower keeps its
books and records including its records concerning the Collateral.
Borrower will notify Lender prior to any change in the location of
Borrower's state of organization or any change in Borrower's name.
Borrower shall do all things necessary to preserve and to keep in full
force and effect its existence, rights and privileges, and shall comply
with all regulations, rules, ordinances, statutes, orders and decrees of
any governmental or quasi-governmental authority or court applicable to
Borrower and Borrower's business activities.

Assumed Business Names.  Borrower has filed or recorded all documents
or filings required by law relating to all assumed business names used
by Borrower.  Excluding the name of Borrower, the following is a complete
list of all assumed business names under which Borrower does business:
None.

Authorization.  Borrower's execution, delivery, and performance of
this Agreement and all the Related Documents have been duly authorized
by all necessary action by Borrower and do not conflict with, result
in a violation of, or constitute a default under (1) any provision of
Borrower's articles of incorporation or organization, or bylaws, or
any agreement or other instrument binding upon Borrower or (2) any
law, governmental regulation, court decree, or order applicable to
Borrower or to Borrower's properties.

Financial Information.  Each of Borrower's financial statements
supplied to Lender truly and completely disclosed Borrower's financial
condition as of the date of the statement, and there has been no material
adverse change in Borrower's financial condition subsequent to the date
of the most recent financial statement supplied to Lender.  Borrower has
no material contingent obligations except as disclosed in such financial
statements.

Legal Effect.  This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will
against Borrower in accordance with their respective terms.

Properties.  Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender
and as accepted by Lender, and except for property tax liens for taxes
not presently due and payable, Borrower owns and has good title to all
of Borrower's properties free and clear of all Security Interests, and
has not executed any security documents or financing statements relating
to such properties.  All of Borrower's properties are titled in Borrower's
legal name, and Borrower has not used or filed a financing statement under
any other name for at least the last five (5) years.

Hazardous Substances.  Except as disclosed to and acknowledged by Lender
in writing, Borrower represents and warrants that: (1) During the period
of Borrower's ownership of Borrower's Collateral, there has been no use,
generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance by any person on, under,
about or from any of the Collateral. (2) Borrower has no knowledge of,
or reason to believe that there has been (a) any breach or violation of
any Environmental Laws; (b) any use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any Hazardous
Substance on, under, about or from the Collateral by any prior owners
or occupants of any of the Collateral; or (c) any actual or threatened
litigation or claims of any kind by any person relating to such matters.
(3) Neither Borrower nor any tenant, contractor, agent or other authorized
user of any of the Collateral shall use, generate, manufacture, store,
treat, dispose of or release any Hazardous Substance on, under, about
or from any of the Collateral; and any such activity shall be conducted
in compliance with all applicable federal, state, and local laws,
regulations, and ordinances, including without limitation all
Environmental Laws.  Borrower authorizes Lender and its agents to
enter upon the Collateral to make such inspections and tests as Lender
may deem appropriate to determine compliance of the Collateral with
this section of the Agreement.  Any inspections or tests made by Lender
shall be at Borrower's expense and for Lender's purposes only and shall
not be construed to create any responsibility or liability on the part
of Lender to Borrower or to any other person.  The representations and
warranties contained herein are based on Borrower's due diligence in
investigating the Collateral for hazardous waste and Hazardous
Substances.  Borrower hereby (1) releases and waives any future
claims against Lender for indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such laws,
and (2) agrees to indemnify and hold harmless Lender against any and
all claims, losses, liabilities, damages, penalties, and expenses
which Lender may directly or indirectly sustain or suffer resulting
from a breach of this section of the Agreement or as a consequence
of any use, generation, manufacture, storage, disposal, release or
threatened release of a hazardous waste or substance on the Collateral.
The provisions of this section of the Agreement, including the obligation
to indemnify, shall survive the payment of the Indebtedness and the
termination, expiration or satisfaction of this Agreement and shall
not be affected by Lender's acquisition of any interest in any of the
Collateral, whether by foreclosure or otherwise.

Litigation and Claims.  No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any,
that have been disclosed to and acknowledged by Lender in writing.

Taxes.  To the best of Borrower's knowledge, all of Borrower's tax returns
and reports that are or were required to be filed, have been filed,
and all taxes, assessments and other governmental charges have been
paid in full, except those presently being or to be contested by Borrower
in good faith in the ordinary course of business and for which adequate
reserves have been provided.

Lien Priority.  Unless otherwise previously disclosed to Lender in
writing, Borrower has not entered into or granted any Security Agreements,
or permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way
be superior to Lender's Security Interests and rights in and to such
Collateral.

Binding Effect.  This Agreement, the Note, all Security Agreements (if any),
and all Related Documents are binding upon the signers thereof, as well as
upon their successors, representatives and assigns, and are legally
enforceable in accordance with their respective terms.

AFFIRMATIVE COVENANTS.  Borrower covenants and agrees with Lender that,
so long as this Agreement remains in effect, Borrower will:

Notices of Claims and Litigation.  Promptly inform Lender in writing of
(1) all material adverse changes in Borrower's financial condition, and
(2) all existing and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of Borrower
or the financial condition of any Guarantor.

Financial Records.  Maintain its books and records in accordance with
GAAP, applied on a consistent basis, and permit Lender to examine and
audit Borrower's books and records at all reasonable times.

Financial Statements.  Furnish Lender with the following:

Annual Statements.  As soon as available, but in no event later than
one-hundred-twenty (120) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended,
audited by a certified public accountant satisfactory to Lender.
Interim Statements.  As soon as available, but in no event later than
thirty (30) days after the end of each month, Borrower's balance sheet
and profit and loss statement for the period ended, prepared by Borrower.

Additional Requirements.  GUARANTOR FINANCIAL STATEMENTS DUE ANNUALLY
WITHIN 120 DAYS OF BORROWERS YEAR END.

All financial reports required to be provided under this Agreement shall
be prepared in accordance with GAAP, applied on a consistent basis, and
certified by Borrower as being true and correct.

Additional Information.  Furnish such additional information and
statements, as Lender may request from time to time.

Financial Covenants and Ratios.  Comply with the following covenants
and ratios:

Working Capital Requirements.  Borrower shall comply with the following
working capital ratio requirements:

Current Ratio.  Maintain a Current Ratio in excess of 1.000 to 1.000.
The term "Current Ratio" means Borrower's total Current Assets divided
by Borrower's total Current Liabilities.  This liquidity ratio will be
evaluated as of year-end.

Minimum Income and Cash flow Requirements.  Borrower shall comply with
the following cash flow ratio requirements:

Cash Flow / Current Maturity (LTD) Ratio.
Maintain a ratio of Cash Flow/Current Maturity (LTD) in excess of
1.500 to 1.000. The ratio "Cash Flow/Current Maturity (LTD)" means
Borrower's Net Profits plus Depreciation, Depletion and Amortization
divided by Borrower's Current Portion of Long Term Indebtedness.

Tangible Net Worth Requirements.  Maintain a minimum Tangible Net Worth
of not less than: $3,000,000.00. In addition, Borrower shall comply with
the following net worth ratio requirements:

Debt / Worth Ratio.  Maintain a ratio of Debt /Worth not in
excess of 3.000 to 1.000. The ratio "Debt / Worth" means
Borrower's Total Liabilities divided by Borrower's Tangible Net Worth.
This leverage ratio will be evaluated as of year-end.

Except as provided above, all computations made to determine compliance
with the requirements contained in this paragraph shall be made in
accordance with generally accepted accounting principles, applied on
a consistent basis, and certified by Borrower as being true and correct.

Insurance.  Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverages
and with insurance companies acceptable to Lender.  Borrower, upon
request of Lender, will deliver to Lender from time to time the policies
or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without
at least thirty (30) days prior written notice to Lender.  Each insurance
policy also shall include an endorsement providing that coverage in
favor of Lender will not be impaired in any way by any act, omission
or default of Borrower or any other person.  In connection with all
policies covering assets in which Lender holds or is offered a security
interest for the Loans, Borrower will provide Lender with such lender's
loss payable or other endorsements as Lender may require.

Insurance Reports.  Furnish to Lender, upon request of Lender,
reports on each existing insurance policy showing such information as
Lender may reasonably request, including without limitation the following:
(1) the name of the insurer; (2) the risks insured; (3) the amount of the
policy; (4) the properties insured; (5) the then current property values
on the basis of which insurance has been obtained, and the manner of
determining those values; and (6) the expiration date of the policy.
In addition, upon request of Lender (however not more often than annually),
Borrower will have an independent appraiser satisfactory to Lender determine,
as applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.

Guaranties.  Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, executed by the guarantor named
below, on Lender's forms, and in the amount and under the conditions set
forth in those guaranties.

      Name of Guarantor                         Amount
      J WARD MCCONNELL JR                    $2,500,000.00

Other Agreements.  Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.

Loan Proceeds.  Use all Loan proceeds solely for the following specific
purposes; WORKING CAPITAL.

Taxes, Charges and Liens.  Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every
kind and nature, imposed upon Borrower or its properties, income,
or profits, prior to the date on which penalties would attach, and
all lawful claims that, if unpaid, might become a lien or charge upon
any of Borrower's properties, income, or profits.

Performance.  Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower
and Lender.  Borrower shall notify Lender immediately in writing of any
default in connection with any agreement.

Operations.  Maintain executive and management personnel with
substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender
of any change in executive and management personnel; conduct its
business affairs in a reasonable and prudent manner.

Environmental Studies.  Promptly conduct and complete, at Borrower's
expense, all such investigations, studies, samplings and testings
as may be requested by Lender or any governmental authority relative
to any substance, or any waste or by-product of any substance defined
as toxic or a hazardous substance under applicable federal, state,
or local law, rule, regulation, order or directive, at or affecting
any property or any facility owned, leased or used by Borrower.

Compliance with Governmental Requirements.  Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower's
properties, businesses and operations, and to the use or occupancy
of the Collateral, including without limitation, the Americans With
Disabilities Act.  Borrower may contest in good faith any such law,
ordinance, or regulation and withhold compliance during any proceeding,
including appropriate appeals, so long as Borrower has notified Lender
in writing prior to doing so and so long as, in Lender's sole opinion,
Lender's interests in the Collateral are not jeopardized.  Lender may
require Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender's interest.

Inspection.  Permit employees or agents of Lender at any reasonable
time to inspect any and all Collateral for the Loan or Loans and
Borrower's other properties and to examine or audit Borrower's books,
accounts, and records and to make copies and memoranda of Borrower's
books, accounts, and records.  If Borrower now or at any time hereafter
maintains any records (including without limitation computer generated
records and computer software programs for the generation of such records)
in the possession of a third party, Borrower, upon request of Lender,
shall notify such party to permit Lender free access to such records
at all reasonable times and to provide Lender with copies of any records
it may request, all at Borrower's expense.

Compliance Certificates.  Unless waived in writing by Lender, provide
Lender within thirty (30) days after the end of each month, with a
certificate executed by Borrower's chief financial officer, or other
officer or person acceptable to Lender, certifying that the
representations and warranties set forth in this Agreement are true
and correct as of the date of the certificate and further certifying
that, as of the date of the certificate, no Event of Default exists
under this Agreement.

Environmental compliance and Reports.  Borrower shall comply in all
respects with any and all Environmental Laws; not cause or permit to
exist, as a result of an intentional or unintentional action or omission
on Borrower's part or on the part of any third party, on property owned
and/or occupied by Borrower, any environmental activity where damage may
result to the environment, unless such environmental activity is pursuant
to and in compliance with the conditions of a permit issued by the
appropriate federal, state or local governmental authorities;
shall furnish to Lender promptly and in any event within thirty (30)
days after receipt thereof a copy of any notice, summons, lien,
citation, directive, letter or other communication from any governmental
agency or instrumentality concerning any intentional or unintentional
action or omission on Borrower's part in connection with any
environmental activity whether or not there is damage to the environment
and/or other natural resources.

Additional Assurances.  Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, assignments, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.

LENDER'S EXPENDITURES.  If any action or proceeding is commenced that
would materially affect Lender's interest in the Collateral or if Borrower
fails to comply with any provision of this Agreement or any Related
Documents, including but not limited to Borrower's failure to discharge
or pay when due any amounts Borrower is required to discharge or pay under
this Agreement or any Related Documents, Lender on Borrower's behalf may
(but shall not be obligated to) take any action that Lender deems
appropriate, including but not limited to discharging or paying all taxes,
liens, security interests, encumbrances and other claims, at any time
levied or placed on any Collateral and paying all costs for insuring,
maintaining and preserving any Collateral.  All such expenditures incurred
or paid by Lender for such purposes will then bear interest at the rate
charged under the Note from the date incurred or paid by Lender to the
date of repayment by Borrower.  All such expenses will become a part of
the Indebtedness and, at Lender's option, will (A) be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be
payable with any installment payments to become due during either
(1) the term of any applicable insurance policy; or (2) the remaining
term of the Note; or(C) be treated as a balloon payment which will be
due and payable at the Note's maturity.

NEGATIVE COVENANTS.  Borrower covenants and agrees with Lender that
while this Agreement is in effect, Borrower shall not, without the
prior written consent of Lender:

Capital Expenditures. Make or contract to make capital expenditures,
including leasehold improvements, in any fiscal year in excess of
$250,000.00 or incur liability for rentals of property (including
both real and personal property) in an amount which, together with
capital shall in any fiscal year exceed such sum.

Indebtedness and Liens. (1) Except for trade debt incurred in the
normal course of business and indebtedness to Lender
contemplated by this create, incur or assume indebtedness for
borrowed money, including capital leases, (2) sell, transfer,
mortgage, assign, pledge, lease, grant a security interest in,
or encumber any of Borrower's assets (except as allowed as
Permitted Liens), or (3) sell with recourse any of Borrower's
accounts, except to Lender.

Continuity of Operations. (1) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (2) cease operations, liquidate, merge, transfer, acquire
or consolidate with any other entity, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business,
or (3) pay any dividends on Borrower's stock (other than dividends
payable in its stock), provided, however that notwithstanding the
foregoing, but only so long as no Event of Default has occurred
and is continuing or would result from the payment of dividends,
if Borrower is a "Subchapter S Corporation" (as defined in the
Internal Revenue Code of 1986, as amended), Borrower may pay cash
dividends on its stock to its shareholders from time to time in
amounts necessary to enable the shareholders to pay income taxes
and make estimated income tax payments to satisfy their
liabilities under federal and state law which arise solely from
their status as Shareholders of a Subchapter S Corporation because
of their ownership of shares of Borrower's stock, or purchase or
retire any of Borrower's outstanding shares or alter or amend
Borrower's capital structure.

Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money
or assets, (2) purchase, create or acquire any interest in any other
enterprise or entity, or (3) incur any obligation as surety or guarantor
other than in the ordinary course of business.

CESSATION OF ADVANCES.  If Lender has made any commitment to make any Loan
to Borrower, whether under this Agreement or under any other agreement,
Lender shall have no obligation to make Loan Advances or to disburse Loan
proceeds if: (A) Borrower or any Guarantor is in default under the terms
of this Agreement or any of the Related Documents or any other agreement
that Borrower or any Guarantor has with Lender; (B) Borrower or any
Guarantor dies, becomes incompetent or becomes insolvent, files a petition
in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there
occurs a material adverse change in Borrower's financial condition, in the
financial condition of any Guarantor, or in the value of any Collateral
securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts
to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender; or (E) Lender in good faith deems itself
insecure, even though no Event of Default shall have occurred.

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves
a right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account).  This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust
accounts for which setoff would be prohibited by law.  Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all
sums owing on the Indebtedness against any and all such accounts, and, at
Lender's option, to administratively freeze all such accounts to allow
Lender to protect Lender's charge and setoff rights provided in this
paragraph.

DEFAULT.  Each of the following shall constitute an Event of Default
under this Agreement:
Payment Default. Borrower fails to make any payment when due under the Loan.

Other Defaults. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any
of the Related Documents or to comply with or to perform any term,
obligation, covenant or condition contained in any other agreement
between Lender and Borrower.

Default in Favor of Third Parties.  Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or
person that may materially affect any of Borrower's or any Grantor's
property or Borrower's or any Grantor's ability to repay the Loans
or perform their respective obligations under this Agreement or any of
the Related Documents.

False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this
Agreement or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished or
becomes false or misleading at any time thereafter.

Insolvency. The dissolution or termination of Borrower's existence
as a going business, the insolvency of Borrower, the appointment
of a receiver for any part of Borrower's property, any assignment
for the benefit of creditors, any type of creditor workout, or the
commencement of any proceeding under any bankruptcy or insolvency
laws by or against Borrower.

Defective Collateralization.  This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
document to create a valid and perfected security interest or lien) at any
time and for any reason.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency
against any collateral securing the Loan.  This includes a garnishment
of any of Borrower's accounts, including deposit accounts, with Lender.
However, this Event of Default shall not apply if there is a good faith
dispute by Borrower as to the validity or reasonableness of the claim
which is the basis of the creditor or forfeiture proceeding and if Borrower
gives Lender written notice of the creditor or forfeiture proceeding and
deposits with Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion,
as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor.  Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the Indebtedness.  In the event of a death, Lender, at its
option, may, but shall not be required to, permit the Guarantor's estate to
assume unconditionally the obligations arising under the guaranty in a
manner satisfactory to Lender, and, in doing so, cure any Event of Default.

Change in Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.

Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of
the Loan is impaired.

Insecurity. Lender in good faith believes itself insecure.
Right to Cure. If any default, other than a default on Indebtedness,
is curable and if Borrower or Grantor, as the case may be, has not
been given a notice of a similar default within the preceding twelve
(12) months, it may be cured (and no Event of Default will have occurred)
if Borrower or Grantor, as the case may be, after receiving written notice
from Lender demanding cure of such default: (1) cure the default within
twenty (20) days; or (2) if the cure requires more than twenty (20) days,
immediately initiate steps which Lender deems in Lender's sole discretion
to be sufficient to cure the default and thereafter continue and complete
all reasonable and necessary steps sufficient to produce compliance as
soon as reasonably practical.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur,
except where otherwise provided in this Agreement or the Related
Documents, all commitments and obligations of Lender under this
Agreement or the Related Documents or any other agreement immediately
will terminate (including any obligation to make further Loan Advances
or disbursements), and, at Lender's option, all Indebtedness immediately
will become due and payable, all without notice of any kind to Borrower,
except that in the case of an Event of Default of the type described in
the "Insolvency" subsection above, such acceleration shall be automatic
and not optional.  In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity,
or otherwise.  Except as may be prohibited by applicable law, all of
Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently.  Election by Lender to pursue any remedy
shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Borrower or
of any Grantor shall not affect Lender's right to declare a default and
to exercise its rights and remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:

Amendments. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement.  No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or parties
sought to be charged or bound by the alteration or amendment.

Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's
costs and expenses, including Lender's attorneys' fees and Lender's legal
expenses, incurred in connection with the enforcement of this Agreement.
Lender may hire or pay someone else to help enforce this Agreement, and
Borrower shall pay the costs and expenses of such enforcement.  Costs
and expenses include Lender's attorneys' fees and legal expenses whether
or not there is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services.  Borrower also shall pay all court costs and such
additional fees as may be directed by the court.

Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.

Consent to Loan Participation. Borrower agrees and consents to Lender's sale
or transfer, whether now or later, of one or more participation interests
in the Loan to one or more purchasers, whether related or unrelated to
Lender.  Lender may provide, without any limitation whatsoever, to any one
or more purchasers, or potential purchasers, any information or knowledge
Lender may have about Borrower or about any other matter relating to the
Loan, and Borrower hereby waives any rights to privacy Borrower may have
with respect to such matters.  Borrower additionally waives any and all
notices of sale of participation interests, as well as all notices of any
repurchase of such participation interests.  Borrower also agrees that the
purchasers of any such participation interests will be considered as the
absolute owners of such interests in the Loan and will have all the rights
granted under the participation agreement or agreements governing the sale
of such participation interests.  Borrower further waives all rights of
offset or counterclaim that it may have now or later against Lender or
against any purchaser of such a participation interest and unconditionally
agrees that either Lender or such purchaser may enforce Borrower's
obligation under the Loan irrespective of the failure or insolvency
of any holder of any interest in the Loan.  Borrower further agrees that
the purchaser of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have
against Lender.

Governing Law. This Agreement will be governed by, construed and enforced
in accordance with federal law and the laws of the State of Iowa.  This
Agreement has been accepted by Lender in the State of Iowa.

Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's request
to submit to the jurisdiction of the courts of POLK County, State of Iowa.

No Waiver by Lender. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender.  No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right.  A waiver by
Lender of a provision of this Agreement shall not prejudice or constitute
a waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement.  No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or between
Lender and any Grantor, shall constitute a waiver of any of Lender's rights
or of any of Borrower's or any Grantor's obligations as to any future
transactions.  Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall
not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.

Notices. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class, certified
or registered mail postage prepaid, directed to the addresses shown near
the beginning of this Agreement.  Any party may change its address for
notices under this Agreement by giving formal written notice to the other
parties, specifying that the purpose of the notice is to change the party's
address.  For notice purposes, Borrower agrees to keep Lender informed at
all times of Borrower's current address.  Unless otherwise provided or
required by law, if there is more than one Borrower, any notice given by
Lender to any Borrower is deemed to be notice given to all Borrowers.

Severability.  If a court of competent jurisdiction finds any provision
of this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance.  If feasible,
the offending provision shall be considered modified so that it becomes
legal, valid and enforceable.  If the offending provision cannot be so
modified, it shall be considered deleted from this Agreement.  Unless
otherwise required by law, the illegality, invalidity, or
unenforceability of any provision of this Agreement shall not affect
the legality, validity or enforceability of any other provision of this
Agreement.

Subsidiaries and Affiliates of Borrower.  To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower"
as used in this Agreement shall include all of Borrower's subsidiaries and
affiliates. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or
other financial accommodation to any of Borrower's subsidiaries or
affiliates.

Successors and Assigns. All covenants and agreements contained by or
on behalf of Borrower shall bind Borrower's successors and assigns and
shall inure to the benefit of Lender and its successors and assigns.
Borrower shall not, however, have the right to assign Borrower's rights
under this Agreement or any interest therein, without the prior written
consent of Lender.

Survival of Representations and Warranties.  Borrower understands and
agrees that in extending Loan Advances, Lender is relying on all
representations, warranties, and covenants made by Borrower in this
Agreement or in any certificate or other instrument delivered by Borrower
to Lender under this Agreement or the Related Documents.  Borrower further
agrees that regardless of any investigation made by Lender, all such
representations, warranties and covenants will survive the extension of
Loan Advances and delivery to Lender of the Related Documents, shall be
continuing in nature, shall be deemed made and redated by Borrower at the
time each Loan Advance is made, and shall remain in full force and effect
until such time as Borrower's Indebtedness shall be paid in full, or until
this Agreement shall be terminated in the manner provided above, whichever
is the last to occur.

Time is of the Essence. Time is of the essence in the performance of this
Agreement.

DEFINITIONS. The following capitalized words and terms shall have the
following meanings when used in this Agreement.  Unless specifically stated
to the contrary, all references to dollar amounts shall mean amounts in
lawful money of the United States of America.  Words and terms used in the
singular shall include the plural, and the plural shall include the singular,
as the context may require.  Words and terms not otherwise defined in this
Agreement shall have the meanings attributed to such terms in the Uniform
Commercial Code.  Accounting words and terms not otherwise defined in this
Agreement shall have the meanings assigned to them in accordance with
generally accepted accounting principles as in effect on the date of this
Agreement:

Advance. The word "Advance" means a disbursement of Loan funds made, or
to be made, to Borrower or on Borrower's behalf on a line of credit or
multiple advance basis under the terms and conditions of this Agreement.

Agreement. The word "Agreement" means this Business Loan Agreement,
as this Business Loan Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this Business
Loan Agreement from time to time.

Borrower. The word "Borrower" means ART'S-WAY MANUFACTURING CO., INC.,
and all other persons and entities signing the Note in whatever capacity.

Collateral. The word "Collateral" means all property and assets granted
as collateral security for a Loan, whether real or personal property,
whether granted directly or indirectly, whether granted now or in the
future, and whether granted in the form of a security interest, mortgage,
collateral mortgage, deed of trust, assignment, pledge, crop pledge,
chaftel mortgage, collateral Chaftel mortgage, chaftel trust, factor's
lien, equipment trust, conditional sale, trust receipt, lien, charge,
lien or title retention contract, lease or consignment intended as a
security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.

Environmental Laws. The words "Environmental Laws" mean any and all
state, federal and local statutes, regulations and ordinances relating
to the protection of human health or the environment, including without
limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986,
Pub.  L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal
laws, rules, or regulations adopted pursuant thereto.

Event of Default.  The words "Event of Default" mean any of the events of
default set forth in this Agreement in the default section of this Agreement.

GAAP. The word "GAAP" means generally accepted accounting principles.

Grantor. The word "Grantor" means each and all of the persons or entities
granting a Security Interest in any Collateral for the Loan, including
without limitation all Borrowers granting such a Security Interest.

Guarantor.  The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Loan.

Guaranty.  The word "Guaranty" means the guaranty from Guarantor to Lender,
including without limitation a guaranty of all or part of the Note.

Hazardous Substances.  The words "Hazardous Substances" mean materials that,
because of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to human
health or the environment when improperly used, treated, stored, disposed
of, generated, manufactured, transported or otherwise handled.  The words
"Hazardous Substances" are used in their very broadest sense and include
without limitation any and all hazardous or toxic substances, materials
or waste as defined by or listed under the Environmental Laws.  The term
"Hazardous Substances" also includes, without limitation, petroleum and
petroleum by-products or any fraction thereof and asbestos.

Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest together
with all other indebtedness and costs and expenses for which Borrower
is responsible under this Agreement or under any of the Related Documents.

Lender.  The word "Lender" means WEST DES MOINES STATE BANK, its successors
and assigns.

Loan.  The word "Loan" means any and all loans and financial accommodations
from Lender to Borrower whether now or hereafter existing, and however
evidenced, including without limitation those loans and financial
accommodations described herein or described on any exhibit or schedule
attached to this Agreement from time to time.

Note. The word "Note" means the Note executed by ART'S-WAY MANUFACTURING
CO., INC. in the principal amount of $2,500,000.00 dated April 25, 2003,
together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of, and substitutions for the note or
credit agreement.

Permitted Liens. The words "Permitted Liens" mean (1) liens and security
interests securing Indebtedness owed by Borrower to Lender; (2) liens for
taxes, assessments, or similar charges either not yet due or being contested
in good faith; (3) liens of materialmen, mechanics, warehousemen, or
carriers, or other like liens arising in the ordinary course of business
and securing obligations which are not yet delinquent; (4) purchase money
liens or purchase money security interests upon or in any property acquired
or held by Borrower in the ordinary course of business to secure
indebtedness outstanding on the date of this Agreement or permitted to be
incurred under the paragraph of this Agreement titled "Indebtedness and
Liens"; (5) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in writing;
and (6) those liens and security interests which in the aggregate constitute
an immaterial and insignificant monetary amount with respect to the net
value of Borrower's assets.

Related Documents. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Loan.

Security Agreement.  The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements, understandings
or other agreements, whether created by law, contract, or otherwise,
evidencing, governing, representing, or creating a Security Interest.

Security Interest. The words "Security Interest" mean, without limitation,
any and all types of collateral security, present and future, whether in
the form of a lien, charge, encumbrance, mortgage, deed of trust, security
deed, assignment, pledge, crop pledge, chattel mortgage, collateral
chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien or title retention contract,
lease or consignment intended as a security device, or any other
security or lien interest whatsoever whether created by law, contract,
or otherwise.

Tangible Net Worth.  The words "Tangible Net Worth" mean Borrower's
total assets excluding all intangible assets (i.e., goodwill, trademarks,
patents, copyrights, organizational expenses, and similar intangible
items, but including leaseholds and leasehold improvements)less total debt.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS
LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN
AGREEMENT IS DATED APRIL 25, 2003.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS BUSINESS
LOAN AGREEMENT AND ALL OTHER DOCUMENTS RELATING TO THIS DEBT.

BORROWER:

ART'S-WAY MANUFACTURING CO., INC.

By:
JOHN C BREITUNG, PRESIDENT of ART'S-WAY
MANUFACTURING CO., INC.

LENDER:

WEST DES MOINES STATE BANK

By:
Authorized Signer