Eligible Borrower:

An eligible borrower will:

• Use the loan proceeds to establish or expand an agricultural business in Texas.
• Meet the lender’s underwriting criteria.
• Have each of the following:

• A credit score of 650 or greater.
• Equity contribution of at least 15% of the loan amount.
• Debt to equity of 2:1 or less.
• Debt service coverage of 1.25 or better.

Eligible Lender:

• Any state or nationally chartered banking institution 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 and is valid for 30 days. **

Use of Funds:

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

• Working capital.
• Lease of facilities.
• Purchase of machinery and equipment.
• 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.