FSA Guaranteed Farm Loans: A Guide for Texas Lenders

Last reviewed November 2026

For Hill Country and rural Texas banks, Farm Service Agency guarantees can make room for farm and ranch credit that would not fit otherwise. Here is how the program works from application through servicing.

Program basics

Rules: 7 CFR part 762 and FSA Handbook 2-FLP. FSA amended part 762 effective October 1, 2026 to streamline loan delivery, including more delegated authority for Preferred Lender Program lenders.
Loan types: farm ownership, operating loans and lines of credit, and conservation loans.
Limits: for FY 2027 (starting October 1, 2026), the combined outstanding guaranteed farm ownership, conservation, soil and water and operating principal owed by anyone signing the note may not exceed $2,558,000. FSA adjusts the limit every fiscal year, and separate combined limits apply when the borrower also has direct FSA loans.
Guarantee: up to 90%. FSA issues 95% guarantees in listed cases, such as qualified beginning farmers, down payment loan participants and refinancing of FSA direct loans. Certified and Preferred lenders receive at least 80%.
Guarantee fee: set by FSA and figured as loan amount times percent guaranteed times the program rate. Certain loans, such as those to beginning or veteran farmers in the down payment program, carry no fee.

Applying and the conditional commitment

The lender applies on FSA-2211 with its credit analysis. FSA decides complete applications from standard eligible lenders within 30 calendar days and from certified and preferred lenders within 14 days. When approved, FSA issues a conditional commitment on FSA-2232. The lender reviews the conditions, signs and returns it, and must meet every condition before FSA issues the guarantee. If a condition does not work, ask FSA about alternatives before closing.

Closing

FSA lets the lender use its own notes, line of credit agreements, deeds of trust and security agreements, as long as they meet FSA requirements, comply with Texas law and state repayment terms that match the conditional commitment. For an entity borrower, the note must show the liability of the entity, any embedded entities and each member individually, though FSA can waive individual liability for members owning less than 10%.

Before the guarantee issues, the lender certifies, among other things, that:

Loan conditions have not changed since the application without FSA's written approval.
Required hazard, flood, crop, workers' compensation and life insurance are in force.
Truth in lending, equal credit opportunity and nondiscrimination requirements are met.
The loan is properly closed, liens are perfected and priorities match the commitment.
The borrower has marketable title, and any required assignment of USDA program payments is in place.
Required guaranties are signed and proceeds are used as approved.
There has been no material adverse change in the borrower's condition.

The lender also signs FSA's lender's agreement, delivers the closing report and pays the guarantee fee. Notify FSA of scheduled construction inspections.

Texas farm and ranch collateral

Rural Texas collateral needs careful work: homestead claims on rural acreage, severed mineral and water rights, grazing and hunting leases, crops and livestock, and equipment titles. Texas does not have a USDA-certified central filing system for farm products, so a lender that wants protection against buyers of crops or livestock relies on direct written notice to buyers under the federal Food Security Act. See collateral and lien perfection in Texas.

Servicing

Report a loan that is 30 days past due on FSA's default status form after meeting or trying to meet with the borrower, and update it every 60 days until the default is cured.
Submit guaranteed loan status reports as of March 31 and September 30 each year.
A lender may release security without FSA concurrence only in listed cases, such as a sale at market value with proceeds applied by lien priority, a trade-in for like collateral, or collateral with no value. Other releases need FSA's written approval.
Watch for conversion of collateral and apply sale and insurance proceeds by lien priority.

How KS can help

Kennedy Sutherland LLP has closed FSA guaranteed loans for lenders. The firm prepares lender-side documents for FSA guaranteed loans and reviews Texas farm and ranch collateral, title and lien issues. Fixed-fee quotes are available for SBA and USDA loan closings. Initial consultations for lenders are free. Call 210.259.3885.

This guide is general information for lenders and borrowers, not legal advice. Reading it does not create an attorney-client relationship. SBA, USDA and FSA rules change often, so confirm the current program requirements and the terms of your loan's authorization or commitment before relying on it. Kennedy Sutherland LLP is a private law firm. It is not affiliated with or endorsed by SBA, USDA or FSA.

Sources

Sources checked November 2026.

FSA Guaranteed Farm Ownership and Operating Loans: A Guide for Texas Lenders