The FSA guaranteed loan limit is $2.34 million, with 95% guaranteed by USDA.
INTEREST RATE CONSIDERATIONS
Lenders set the interest rates for both SBA and FSA guaranteed loans, but the two agencies have different caps.
— FSA typical maximum rate: 9.5% to 12%
— SBA typical maximum rate: 13% to 15%
SBA also allows lenders to charge higher interest rates for smaller loans. A farmer seeking a $50,000 loan could have a 2% higher interest rate than a farmer taking out a $5 million loan.
Smaller borrowers could face higher interest rates with FSA guaranteed loans, but that would be tied to risk and collateral, not as a specific policy.
‘LENDER OF LAST RESORT’ RULES
Under FSA rules, farmers must show they cannot obtain sufficient credit from commercial lenders “at reasonable rates and terms” to apply for both direct loans and guaranteed loans.
SBA has a similar requirement that the agency cannot provide assistance “if the applicant can obtain credit elsewhere” without facing significantly higher interest rates or excessive collateral requirements. Banks self-certify those conditions for SBA.
LOAN FEES
SBA charges an upfront loan fee for the guaranteed portion of its core loan program that increases with larger loans. For instance, a $2.5 million loan would have a 3.5% fee up to $1 million plus a 3.75% fee for the rest of the loan.
USDA charges a 1.5% fee on the guaranteed portion of its loans.
Both agencies also charge annual fees of 0.55% on the outstanding portion of guaranteed loans.
However, for larger loans with 15-year maturity rates or longer, SBA also charges pre-payment penalties if the loan is paid off in the first three years.
LOAN VOLUME
SBA’s 7(a) loan program last year provided $45 billion in loans to 85,000 businesses with the average loan of roughly $529,000.
SBA said it provided more than $7 billion in loans in rural communities in 2025.
USDA’s website doesn’t have updated information on FSA loans for FY 2025. In FY 2024, USDA provided $2.25 billion in guaranteed loans and $3.1 billion in direct loans. Guaranteed loans are a smaller portion of USDA’s loan customers, making up just 4,529 customers out of 24,555 overall. The average FSA guaranteed loan was $497,000 — combining both farm ownership and operating loans.
LENDING OPTIONS
SBA has a list of lenders eligible to apply for SBA loans. As government-sponsored enterprises, Farm Credit lenders typically have not been eligible for SBA guaranteed loans, but check with your local Farm Credit office in case the rules have changed.
SBA also has finance managers in each state to assist businesses. (https://www.sba.gov/…)
For more information on the SBA loan program, see: https://www.sba.gov/….
Chris Clayton can be reached at Chris.Clayton@dtn.com
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