COLLEGE STATION – USDA Texas Farm Service Agency (FSA) Executive Director Judith A. Canales announced recently that Texas Rural Communities, Inc. has been approved as a nontraditional FSA Guaranteed Loan lender in Texas.
A recently revised policy allows FSA to issue farm loan guarantees to nontraditional lenders. Nontraditional lenders can originate, hold and service guaranteed loans.
The goal of Texas Rural Communities is to improve and maintain the quality of rural communities. This goal is accomplished by assisting rural communities, individuals, groups and support organizations with viable rural development enterprises.
FSA has worked with traditional lenders in the past but is now expanding to work with both traditional and nontraditional lenders. A nontraditional lender is one that does not typically hold deposit accounts and is not subject to oversight and supervision. The most common nontraditional lenders are those who are funded under the U.S. Department of Treasury’s Community Development Financial Institutions Fund (CDFI).
FSA guaranteed loans allow lenders to provide agricultural credit to farmers who do not meet the lender’s normal underwriting criteria. Farmers and ranchers apply for a guaranteed loan through a lender, and the lender arranges for the guarantee. FSA can guarantee up to 95 percent of the loss of principal and interest on a loan. Guaranteed loans can be used for both farm ownership and operating purposes.
“The agency has expanded its authority to extend guarantees to nontraditional lenders like Texas Rural Communities, Inc. in order to provide credit to producers who operate in underserved locations,” Canales said.
For questions regarding the FSA Guaranteed Loan program, contact your lender or your local FSA office.