Maximum Interest Rates on Guaranteed Farm Loans

The Farm Service Agency (FSA) is issuing this interim rule amending the regulations that specify interest rates on guaranteed farm loans. This rule will tie the maximum interest rate that may be charged on FSA guaranteed farm loans to nationally published indices, specifically the 3-month London Interbank Offered Rate (LIBOR) or the 5-year Treasury note rate, unless the lender uses a formal written risk-based pricing practice for loans, in which case the rate must be at least one risk tier lower than the borrower would receive without the guarantee. These provisions are intended to increase clarity and specificity in the maximum rate requirements, while at the same time setting rates that will work in current credit market conditions.