On September 4, 2026, the U.S. Department of Agriculture’s (“USDA”) Farm Service Agency (“FSA”) published a final rule making policy changes and technical and clarifying corrections to the agency’s farm loan program. The final rule, titled “Driving Efficiency in Farm Loan Delivery,” effectuates changes intended to streamline and modernize the FSA farm loan program, such as permanently implementing the Application Fast Track (“AFT”) pilot program. The final rule amends the Consolidated Farm and Rural Development Act (“Con Act”) which provides the statutory authority for most of FSA’s farm loans. 7 U.S.C. §§ 1921-2009cc-18.
The final rule went into effect on October 1, 2026, and is codified at 7 C.F.R. § 761, 762, 763, 764, 765, 766, 767, 768, 770, 772. This article will provide a brief overview of the FSA farm loan program and then highlight several substantive policy changes enacted by the final rule including the permanent enactment of the Application Fast Track (“AFT”) and changes to direct and guaranteed loan programs. Participants in USDA’s farm loan programs will need to be aware of these changes as FSA implements the changes in the administration of direct and guaranteed FSA loans.
Background
USDA’s farm loan program was created to provide subsidized credit opportunities to farmers and ranchers who are ineligible to receive loans from traditional, commercial lenders. The goal of the program is to provide these borrowers with financial support at reasonable rates so the borrower can build up enough financial stability to graduate to a traditional commercial lender. For example, a young, beginning farmer with poor credit or few assets can apply to FSA for a direct loan to finance the purchase of farmland. Alternatively, the young, beginning farmer could apply for a loan with a commercial lender, and the lender can apply for a guaranteed loan, where FSA acts as the guarantor in case of default, allowing the commercial lender to offer a loan with reasonable rates to the farmer. In this way, farmers who are not eligible for loans under traditional terms are able to receive support for their operations through either direct or guaranteed loans from FSA. For an overview of FSA’s farm loan program, click here.
Overview
The final rule, effective on October 1, 2026, implemented numerous updates to FSA regulations governing the farm loan program. While some of the changes are purely technical in nature, other aspects of the proposal are more substantive, highlighting the agency’s intention to update the loan making process to increase credit access. The following is an overview of some of the most substantive parts of the final rule, including changes made to both the direct and the guaranteed loan programs.
Final Rule Changes to the Direct Loan Program
Direct loans provide borrowers the opportunity to receive farm ownership and farm operating loans as direct loans, serviced by FSA. For example, a row crop farmer may need to take out a loan to help finance a new tractor or to purchase fertilizer for the upcoming season. If that farmer does not qualify for a loan at any of the local commercial banks or farm credit associations, he can apply for a loan at his local FSA office. If he meets all the other criteria and receives the loan, his loan would be categorized as a direct farm operating loan because FSA is the direct administrator.
The final rule implemented broad changes as well as specific changes to the direct farm loan program, and while this article is not exhaustive, the following highlights five policy changes to the direct loan program.
Application Fast Track (“AFT”) Program
According to FSA in the final rule, the policy changes contained in the final rule are part of an “ongoing effort to deliver farmer-focused programs in the most efficient and cost-effective manner possible.” Part of this efficiency focus includes the permanent authorization and implementation of the AFT pilot program. AFT was launched in August of 2023 to facilitate faster loan processing for direct loan applications with low risk. The program was extended to September 2024, and again in December of 2024. Although AFT began as a pilot program, it was made available to all eligible customers on January 1, 2024. Now, following the finalization of the new FSA Rule, AFT is a permanent program.
AFT permits applications to go through an “alternative underwriting process” if the potential borrower meets specific financial benchmarks and has a positive repayment history, allowing the loan application to be accelerated. For example, a borrower with higher projections of repayment could be classified as low-risk and be eligible for AFT. AFT would then allow the application to be processed much faster because the financial risk is lower and requires less in-depth analysis. In other words, AFT offers potential borrowers the opportunity to have their loan application processed faster based on their repayment risk and financial foundation. This permits the borrower to bypass the traditional loan processing timeline and receive access to loan funds faster and more efficiently.
Real Estate Appraisals
Previously, real estate appraisals used for approval of direct loans must have been completed within the past 18 months. This differed from guaranteed loans, where lenders were allowed to rely on older appraisals in certain circumstances. Specifically, the final rule states that older appraisals could be used when “(1) the lender can document that market conditions have remained stable or improved; (2) the property is in the same or better condition; and (3) the property’s value has remained the same or increased.” Under the final rule, the requirements are more in line between the two types of loans. Specifically, real estate appraisals up to 36 months old may be used for direct loan approvals, provided all three criteria above are met. According to FSA, this change will reduce the number of new appraisals the agency must fund as well as shorten loan processing and closing time.
Alternative Repayment Terms
Under the direct loan program, the first installment a borrower pays for an operating loan, farm ownership loan, or emergency loan is normally an interest-only payment that is due 12 months after the loan closing. However, borrowers had the option to submit a written request for a different repayment structure. According to FSA’s final rule, “the majority of direct loan applications request an alternative arrangement that allows them to begin repaying loan principal within the first 12 months after receiving their loan.” Previously, if a borrower wanted to make a payment toward their principal in their first installment or wanted to make their first installment payment earlier than 12 months after the loan closing, they were required to submit a written request directly to FSA. Under the new rule, the borrower no longer needs to make that request in writing. Instead, if the borrower wishes to use an alternative repayment schedule, the FSA agency official can note that on the “notification of loan approval and borrower responsibilities” form, FSA-2313, or the borrower can request it through the form as documented by the applicant’s acceptance and signature.
Financial Training
FSA direct loan borrowers are generally required to participate in a financial training course through the agency within 2 years of receiving a loan. However, borrowers that have completed a similar type of training or have sufficient skills or experience have been able to request the waiver of this requirement. Previously, these borrowers were required to submit a separate written request to have the training requirement waived. Now, under the new rule, borrowers do not have to submit a separate written request for a waiver. Instead, FSA will monitor the eligibility of the borrowers to bypass the financial training requirement due to prior, eligible experience and notify them if they need to participate in further financial training. The agency official will indicate on Form FSA-2313 whether the financial management training is waived or required, based on the agency’s review of the loan application.
Notice by Certified Mail
Under the Con Act, FSA is required to notify borrowers of loan servicing by certified mail when the borrower is at least 90 days past due. However, previous FSA regulations included the certified mail requirement for all primary loan servicing notifications sent to delinquent borrowers, even borrowers that are less than 90 days past due. Now, under the new rule, FSA is only required to send borrowers notice via certified mail when it is mandated by statute, which means when a borrower is 90 days or more past due on their repayment deadline. According to FSA’s final rule, this change was implemented to “improve efficiency and reduce costs” because notification by certified mail is more expensive and could add additional processing time. Therefore, a borrower should only expect to receive notice through certified mail once payments are past due by 90 days.
Final Rule Changes to the Guaranteed Loan Program
In addition to substantive policy changes to FSA’s direct loan program, the final rule also updated regulations implementing the guaranteed loan program. The following highlights two of those changes.
A guaranteed loan provides borrowers with the opportunity to receive a loan from a commercial lender with the financial backing of the FSA, allowing the commercial lender to approve loans for borrowers who may not have otherwise qualified. Borrowers can receive conservation, farm operating, farm ownership, and emergency loans under the guaranteed loan program. Qualified commercial lenders who participate in the guaranteed loan program are categorized as a Standard Eligible Lender (“SEL”), Certified Lender Program (“CLP”) lender, or Preferred Lender Program (“PLP”) lender. As lenders gain experience in the program, they advance up the category ladder towards Preferred. The higher the category, the lower the level of FSA oversight that is required. For example, PLP is the highest lender status and traditionally has access to the most streamlined and expedited processes due to the lender’s increased authority. To learn more about USDA’s guaranteed lender eligibility and status, click here.
Delegated Authority
Under the law, PLP lenders are permitted to make decisions about the financial health of the borrower’s loan using the lender’s “internal underwriting policies.” Previously, as stated in the final rule, the lenders were “subject to FSA concurrence based on a detailed narrative summary, rather than providing specific financial documentation.” Now, under the final rule, PLP lenders are allowed to provide a certification of the borrower’s creditworthiness based on the documentation they have obtained rather than submitting the previously required “detailed narrative summary.” This delegated authority is only available to PLP lenders and must be renewed when the PLP status is renewed. The final rule removes an additional requirement from the lender and instead relies on the lender’s heightened status to streamline review authority.
Subsequent Loans
In some situations, qualified lenders may wish to make a subsequent, unguaranteed loan or advance to a current FSA guaranteed loan borrower. Previously, however, FSA required CLP and SEL lenders to obtain prior written approval before doing so. The requirement was used to monitor any new loans made to make sure that the agency’s collateral position remains protected and the borrower is more likely to be able to repay the guaranteed loan. Now, under the final rule, the prior written approval requirement has been removed for all lenders. However, the lender must still complete their traditional analysis before making the loan and document that the loan requirements have been met prior to making the loan.
Final Rule Changes Applicable to Both Loan Programs
The final rule implemented policy and technical changes as well as clarifications that impact both the direct and guaranteed loan programs. For example, under the original Con Act, FSA direct and guaranteed loan borrowers are required to purchase crop insurance to receive an FSA loan. 7 U.S.C. § 2008f. Specifically, the borrower is required to purchase “at least catastrophic risk protection insurance coverage” under the Federal Crop Insurance Act. 7 U.S.C. § 1508. However, in 1996 the Federal Crop Insurance Act was amended to allow borrowers to opt out of purchasing crop insurance as long as they waived their “eligibility for emergency crop loss assistance.” 7 U.S.C. § 1508(b)(7) (1996). That lasted until 2014, when the Federal Crop Insurance Act was amended and the waiver option removed.
The new rule aligns the direct and guaranteed loan program regulations with the 2014 amendment by removing the waiver option. 7 C.F.R § 762.123; 7 C.F.R. § 764.108. In other words, FSA direct and guaranteed loan borrowers are required to purchase some form of crop insurance in order to be eligible for an FSA loan.
Additionally, the final rule made a clarification regarding a specific term used in both programs. The final rule amended the loan program language to replace every reference to the word “chattel” with the word “personal property.” According to the final rule, “FSA has historically used the term “chattel to describe non-real estate assets pledged as security.” However, because the term “personal property” is used by most commercial lenders, FSA decided to incorporate the use of “personal property” instead of “chattel.” Therefore, statutory provisions and regulations will reflect these changes so the term “personal property” will encompass the previous definition of “chattel.”
Impact of the Final Rule
Although the final rule instituted minor policy changes and technical changes to the farm loan programs, the changes cumulatively reflect the agency’s attempts to streamline, modernize, and accelerate the farm loan process for lenders, borrowers, and agency administrators. It is important for current FSA borrowers, guaranteed loan providers, and future FSA borrowers to be aware of the changes so they may take advantage of the revised procedures and stay in compliance with FSA requirements.
To read the text of the final rule, click here.
To read USDA’s press release, click here.
For more information, check out USDA’s Farm Loan Information Chart or USDA’s factsheet on Guaranteed Loan Program.