Interest Rate Reduction
Skip to content
Interest Rate Reduction

Deadline: Open Enrollment. Lender must apply on behalf of qualified borrower.


The Interest Rate Reduction (IRR) Programs are intended to facilitate lower interest rates to eligible applicants through a commercial lender via a linked deposit program with the Texas Comptroller of Public Accounts (Comptroller).

Upon TAFA approval, the state Comptroller places funds on deposit at the lending institution earning a below-market rate of interest.  The deposit is “linked” to the approved loan, supporting a corresponding reduction in interest rate payable on the loan by the borrower to the institution.  Depending upon market rates payable on demand-deposits at the institution, this structure can reduce interest rates paid by the borrower by up to two or more percentage points.  For more details on this calculation, please refer to the lender’s application and the program specifications sheet.  Links are provided below.

  • Any person who proposes to use loan proceeds for the creation or expansion of an agricultural business in Texas.
  • Individuals between the ages of 18 and 46 are eligible for the Young Farmer Interest Rate Reduction (YFIRR) Program which potentially provides additional interest rate savings.
  • Lender eligibility is limited to financial institutions that make commercial loans and are approved depositories for state funds. A link is also provided to the state Comptroller’s website for more information on becoming an approved state depository.
    Note: Farm Credit System lenders are not eligible as they are not typically depository institutions.

Application Process: 
  • The applicant should discuss the program with his or her lender and have the lender submit the application.
  • The lender submits the application to the Texas Agricultural Finance Authority (TAFA).
  • TAFA and the Texas Department of Agriculture review the application for eligibility and recommend eligible applications to the Comptroller.
  • Upon approval from the Comptroller, the lender deposits funds at a reduced interest rate supporting a reduced lending rate to the borrower.

Use of Funds:
Loan proceeds may be used for any agriculture-related operating expense, including:
  • The purchase of land;
  • A fixed asset acquisition or improvement; and/or
  • Any enterprise based on agriculture, as identified in the application.
  • A loan under this program may be applied to existing debt only when required by the lender to finance the expansion of an eligible project.

Loan Details:  
  • The IRR programs may lower the interest rate of loans that are $500,000 or less.
  • The total of linked deposit loans to any one borrower cannot exceed $500,000.
  • The lender and the borrower determine the repayment, maturity, and collateral for the loan.
  • This program does not offer a loan guarantee.

Interest Rate Determination: 
  • The Comptroller places a linked deposit with the participating financial institution.
  • The interest rate on the linked deposit is determined on the date the loan is funded and based on matching the loan maturity date to the closest U.S. Treasury bill or note maturity date, or the end of the state’s fiscal biennium (Aug. 31 of each odd numbered year).
  • Typically, IRR loans offer interest rates lower than current market rates.
Bon Wier
TAFA Bond Finance Specialist
(512) 936-8163

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