Browse Ambrook’s collection of funding programs by Texas Agricultural Finance Authority (TAFA)

Borrower should visit with a lender to see if they are willing to participate in the program. A lender will need to submit the application to the Department on the Borrower's behalf. TDA does not issue any loans. 

Mindy Fryer

Director, Contracts and Grants

Roxana Newton

Economic Development Project Controller

**Purpose:**


The Texas Agricultural Finance Authority (TAFA) 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&#x2004;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.


**TAFA/TDAs Role:**


Funds allocated to TAFA/TDA for the use of the ALG program are used to support the lenders capital and add protection against reasonable risk associated with the loan by honoring a percentage of debt. TAFA is not involved with the negotiation of interest rates, maturity or collateral. TAFA/TDA reviews applications to ensure credibility and eligibility. 



Purpose:

The Texas Agricultural Finance Authority (TAFA) 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.

TAFA/TDAs Role:

Funds allocated to TAFA/TDA for the use of the ALG program are used to support the lenders capital and add protection against reasonable risk associated with the loan by honoring a percentage of debt. TAFA is not involved with the negotiation of interest rates, maturity or collateral. TAFA/TDA reviews applications to ensure credibility and eligibility. 

- Open to all agricultural enterprises
- The applicant should discuss the program with his/her lender (including any commercial lending bank or Farm Credit System).
- The lender will submit an application to TAFA on the borrower’s behalf.
- The applicant must meet the lender’s underwriting criteria.
- The lender and borrower determine the loan terms, while TAFA retains the right to alter any loan terms as necessary to provide the guarantee.
- The borrower(s) should have a credit score of 650 or greater
- Equity injection of at least 15% of the loan amount
- Debt to equity of 2:1 or less
- Debt service coverage of 1.25 or better
- TAFA’s guarantee shall not exceed a maximum of 10 years or the useful life of the assets being financed.

A payment that must be returned to the provider following specified terms of repayment and interest rate.

Loan

- Loan Guarantee Application
- ALG Overview and FAQ
- Master Lender Agreement
- Publications 
- Online Submission Link


Buildings

Construction

Fencing

Greenhouse

High Tunnel

HVAC

Irrigation

Lighting

Repairs

Storage

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.

Use of Funds:

A loan guarantee recipient may use loan proceeds for any agricultural related purpose, including:
- Working capital for operating a farm or ranch;
- 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.

Fees and Application Costs:

A nonrefundable application fee of $100 is due upon filing the application. An origination fee of no less than 1% of the loan guarantee amount will be due within 10 days of the initial funding of each loan. This money is returned to the Texas Agricultural Fund to finance additional guarantees.

Interest Rebate:

Borrowers under the ALG program may be eligible for a rebate of a portion of the interest they pay on the loan. Agricultural Loan Guarantees approved by the Department may be eligible for a rebate of no more than $500 annually, not to exceed the 1% origination fee over the term of the guarantee. The board may adjust the interest rebate within statutory limits. 

Bon Wier

The Young Farmer Interest Rate Reduction (YFIRR) Program is intended to facilitate a lower interest rate to agricultural producers or agribusiness owners who are between 18 and 46 years of age through a commercial lender. The&#x2004;YFIRR program provides an interest reduction to the borrower on a qualifying bank loan for an eligible project. The Comptroller of Public Accounts for the State of Texas deposits funds in a bank (which must be a state approved depository) at a below market interest rate. The bank issues a loan of like amount, at no more than 4% above the interest rate on the state's deposit. The program does not offer a guaranty or participation by the Authority in the loan. 



The Young Farmer Interest Rate Reduction (YFIRR) Program is intended to facilitate a lower interest rate to agricultural producers or agribusiness owners who are between 18 and 46 years of age through a commercial lender. The YFIRR program provides an interest reduction to the borrower on a qualifying bank loan for an eligible project. The Comptroller of Public Accounts for the State of Texas deposits funds in a bank (which must be a state approved depository) at a below market interest rate. The bank issues a loan of like amount, at no more than 4% above the interest rate on the state's deposit. The program does not offer a guaranty or participation by the Authority in the loan. 

- Any person who is 18 years of age but younger than 46 years who proposes to use loan proceeds for the creation or expansion of an agricultural business in Texas.
- The applicant should discuss the program with his or her lender and have the lender submit the application.
- Eligible lenders include any financial institution that makes commercial loans and is an approved depository for state funds.
- Farm Credit System lenders are not eligible because they are not able to accept deposits form the Comptroller of Public Accounts.
- The lender and the borrower determine the repayment, maturity and collateral for the loan.  

A reduction or waiving of fees for meeting a certain criteria.

Discount

Use of Funds:

Loan proceeds may be used for any agriculture-related operating expense, including:
- The purchase or lease of land;
- 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. 

Interest Rate Determination: The Comptroller of Public Accounts places a linked deposit with a 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, YFIRR loans offer interest rates lower than current market rates.

Term Requirements: The lender and the borrower determine repayment, maturity and collateral for the loan.

List of Texas Agricultural Finance Authority (TAFA) Funding Opportunities