Agricultural Loan Guarantee Program

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Grants & Services > Rural Economic Development > Texas Agricultural Finance Authority > Agricultural Loan Guarantee Program

Deadline: Applications are accepted year-round and subject to avaliable funding.

Purpose:
The Agricultural Loan Guarantee Program (ALG) provides financial assistance to establish or enhance farming or ranching operations or to establish an agricultural-related business. This program assists in the form of guarantees based on a tiered structure, not to exceed:

$250,000 or 90% of the loan amount, whichever is less

$500,000 or 80% of the loan amount, whichever is less.

$750,000 or 70% of the loan amount, whichever is less.

The duration of a loan guarantee approved by TAFA must not exceed the useful life of the assets being financed or 10 years, whichever is less.

Note: The lender and borrower determine the loan terms, while TAFA retains the right to alter any loan terms as necessary to provide the guarantee.

Eligible Borrower:

An individual that will use the loan proceeds to establish or expand an agricultural business in Texas.

Meet the lender’s underwriting criteria.

The borrower(s) should have:

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A credit score of 650 or greater
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Equity contribution of at least 15% of the loan amount

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Debt to equity of 2:1 or less
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Debt service coverage of 1.25 or better
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Eligible Lender:

Any state or nationally chartered banking instittion or farm credit lender.

Application Process:

The application is a joint application for the Lender and the Borrower.
The completed (but unsigned) application is submitted to TDA for review via email at EconomicDevelopment@TexasAgriculture.gov.
Upon initial review for eligibility, TDA staff will distribute the application via DocuSign for electronic signatures by all parties.
If approved, the Lender, the Borrower and TDA will sign an Agricultural Loan Guarantee Agreement which will be part of the loan closing documents.

** The lender may schedule loan closing at any time, however once the guarantee application has been approved an approval letter will be sent, valid for 30 days.


Use of Funds:
A loan guarantee recipient may use loan proceeds for any agricultural related purpose, including:

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Working capital,
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Lease of facilities,
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Purchase of machinery and equipment, and/or

Purchase of real estate, as identified in recipient’s documentation submitted in support of the application.


Fees:

Application Fee: $100 (non-refundable) due at the time of application

Origination Fee: A minimum of 1% of the guaranteed amount due within 10 days of loan closing.

Interest Rebate:
Borrowers under the ALG program may be eligible for a rebate of a portion of the interest they pay on the loan. The maximum annual rebate is $500 and shall not exceed the 1% origination fee over the term of the guarantee. The interest rate rebate may be adjusted by TAFA within statutory limits.

Reporting:

The Lender is responsible for submitting a quarterly report confirming outstanding loan details.

Contact

Bon Wier
TAFA Bond Finance Specialist
(512) 936-8163

Roxana Newton
Program Director for Economic Development
(512) 463-2537


Email: EconomicDevelopment@TexasAgriculture.gov

Additional Resources

Other Financial Assistance

ALG Forms and Information