Agricultural Loan Guarantee Program
Skip to content
Search
(800)-Tell-TDA
835-5832
Agricultural Loan Guarantee Program
 
Deadline: Open Enrollment. Lender must apply on behalf of qualified borrower.

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 provides assistance in the form of guarantees based on a tiered structure, not to exceed $500,000 or 80% of the loan amount, whichever is less.

Eligibility:
  • 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:
    • 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

Application Process:
  • The applicant should discuss the program with his/her lender. TDA does not issue any loans. 
Note:  Eligible lender includes any commercial lending bank and the Farm Credit System.
  • The lender submits a signed Master Lender Agreement to the Texas Department of Agriculture (Department), unless one is already on file.
  • The lender submits the application to the Texas Agricultural Finance Authority (TAFA) via the application portal.
  • Mail the $100 application fee to the Department.
  • TAFA and the Department review the application for eligibility.
  • If approved, an origination fee of no less than 1% of the guaranteed amount will be due within 10 days of the loan closing.

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

Guarantee Amounts:
There are two options depending on the terms of the loan:
  • $250,000 or 90% of the loan amount, whichever is less 
  • $500,000 or 80% 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.

Fees:
  • Application Fee: $100 (non-refundable)
  • Origination Fee: A minimum of 1% of the guaranteed amount.

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

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

Mindy Fryer
Director, Contracts and Grants
(512) 463-6908

Email: EconomicDevelopment@TexasAgriculture.gov

 

 
 
Payment
Application Fee: $100 - due at time of application submission
Origination Fee: 1% of loan guarantee amount - due within 10 days of the initial funding of each loan.

Mail to: 
Texas Department of Agriculture
Attn: TAFA - Ag Loan Guarantee
PO Box 12847 
Austin, Texas 78711

or 
Texas Department of Agriculture
Attn: TAFA - Ag Loan Guarantee
1700 North Congress Ave, 11th Floor
Austin, Texas 78701