NASHVILLE, TN – Farmers relying on USDA Farm Service Agency loans are facing sharply higher borrowing costs as larger loan sizes collide with higher interest rates. New analysis shows both trends have combined to push interest expenses and first-year loan payments to their highest levels in two decades.
Between 2005 and 2025, average FSA loan sizes increased across all programs, reflecting higher input costs, rising machinery expenses, and sharply higher farmland values. Guaranteed operating loans showed the largest growth, more than tripling over the period, while farm ownership loans more than doubled. These larger balances alone raised annual payment obligations.
At the same time, interest rates climbed rapidly after 2021 as the Federal Reserve raised benchmark rates to combat inflation. By 2024 and 2025, average interest rates on new FSA operating loans had returned to levels last seen before the 2008 financial crisis. The combination of higher rates and bigger loans drove first-year interest expenses up 70 to 90 percent, depending on loan type.
The result, according to Sarah Atkinson with USDA’s Farm Production and Conservation Business Center in a FarmDoc Daily article, is tighter cash flow, especially for highly leveraged operations and those relying on variable-rate or adjustable loans. The findings come from a two-part analysis of FSA lending trends by USDA researchers.
Find more here: https://farmdocdaily.illinois.edu/2026/02/double-trouble-part-2-producers-impacted-by-rising-interest-expenses-and-larger-loan-payments.html
Farm-Level Takeaway: Bigger loans and higher rates are squeezing working capital and increasing financial risk.