Relating to the Texas Agricultural Finance Authority and certain programs administered by the authority.

Contracts

• Lender Participation Agreements: Financial institutions participating in the Linked Deposit Program must review master agreements. The statutory limit on the interest rate spread you may charge a borrower has been reduced from 4% to 1%. Any contract terms conflicting with this statutory cap are now void for new deposits.
• Loan Covenants: Borrowers previously restricted by the $500,000 cap under the former "Young Farmer" program should review loan covenants to determine if refinancing or modification is possible up to the new $1,000,000 statutory limit.

Hiring/Training

• Loan Officer Training: Commercial lending teams must be retrained immediately to stop screening for age (18-46). Eligibility now extends to any person who is "engaged in creating or expanding an agricultural business" regardless of age.
• Marketing Compliance: Marketing materials, websites, and application portals must be scrubbed of "Young Farmer" nomenclature. These are now "Agricultural Loan" and "Agricultural Grant" programs.

Reporting & Record-Keeping

• Grant Fund Segregation: With the grant cap raised from $20,000 to $500,000, recipients must implement stricter fund segregation and accounting controls. Expect heightened audit scrutiny for grants of this size.
• Matching Funds Verification: Applicants must update financial documentation protocols. You no longer need to prove a 1:1 match. You must now document a 10% match (e.g., $50,000 cash/equity for a $500,000 grant).

Fees & Costs

• Lender Margin Compression: Lenders face a direct revenue reduction. The maximum spread above the linked deposit rate is now capped at 1%. Lenders must assess if this margin covers administrative overhead for the program.
• Borrower Savings: The cost of capital for borrowers is reduced via the lower match requirement (10% vs 100%) and the enforced lower interest spread from lenders.