Agricultural Loan Guarantee (ALG) Program

Agricultural Loan Guarantee (ALG) Program is sponsored by Texas Department of Agriculture (through Texas Agricultural Finance Authority). This program helps increase access to financing by reducing risk for lenders through a state-backed guarantee, making it easier for agricultural businesses to obtain loans for equipment, working capital, land, and facility improvements.

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The Agricultural Loan Guarantee Program (ALG) provides financial assistance to establish or enhance farming/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: $500,000 or 90% of the loan amount, whichever is less. $750,000 or 80% of the loan amount, whichever is less.

$1,000,000 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.

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

** A loan guarantee recipient may use loan proceeds for any agricultural related purpose, including: Purchase of machinery and equipment. Purchase of real estate, as identified in recipient’s documentation submitted in support of the application. 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. Borrowers under the ALG program may be eligible for a rebate of a portion of the interest they pay on the loan. The interest rate rebate may be adjusted by TAFA within statutory limits.

The Lender is responsible for submitting a quarterly report confirming outstanding loan details. Fraud Warning Disclaimer: Please be aware that certain individuals might approach you by falsely presenting themselves as representatives of the Texas Department of Agriculture (TDA).

Under this false pretense, they might try to gain access to your personal information or to acquire money by claiming that they are contacting you on TDA’s behalf. Such fraudulent offers and claims are usually received via email, text message, phone, etc. These claims and offers are fraudulent and invalid, and you are strongly advised to exercise great caution and disregard such offers and invitations.

You will not be contacted by TDA or the government to request payment before you receive a grant. Please report any attempts to TDA immediately. TDA or the government to request payment before you receive a grant.

Please report any attempts to defraud you to TDA’s Grants Office immediately. You may also report fraudulent activity to the Office of the Texas Attorney General’s Consumer Protection Division at https://www. texasattorneygeneral.

gov/consumer-protection/common-scams . Agriculture & Rural Community Lending Specialist EconomicDevelopment@TexasAgriculture. gov Other Financial Assistance: Farmers.

gov: Funding for Farmers, Ranchers, and Forest Landowners USDA Farm Service Agency Microloan Programs ALG Forms and Information Loan Guarantee Application