U.S. farm producers have been taking on larger average Farm Service Agency (FSA) loans even as borrowing costs climbed sharply after 2021. Sarah Atkinson’s analysis of FSA data finds that average loan amounts rose across both operating and farm ownership programs from 2005 to 2025. The pattern is a sector-wide average—not evidence that every producer borrowed more or paid the same rate.
What the FSA loan data show
Atkinson’s January 2026 analysis compares average amounts for new FSA loan obligations by loan type. The figures below are historical averages, not individual loan offers.
| FSA loan type | Average amount in 2005 | Average amount in 2025 |
|---|---|---|
| Guaranteed operating | $141,000 | $458,000 |
| Direct operating | $59,000 | $97,000 |
| Guaranteed farm ownership | $321,000 | $673,000 |
| Direct farm ownership | $126,000 | $306,000 |
These amounts are averages of new obligations reported in FSA data; they do not describe the balance or borrowing needs of a typical individual farm. Atkinson writes that larger average loans point to “an underlying need for larger levels of financing.” Read the full analysis by Sarah Atkinson at farmdoc daily.
How rates changed—and why loan type matters
Rates rose substantially after 2021, as benchmark rates increased and the Federal Reserve responded to inflation. By the end of 2024, the average rate on new guaranteed farm operating loans was 9.0%, compared with 5.0% for new direct operating loans. Those are historical 2024 averages, not current 2026 quotes. The analysis attributes the rate increase to broader benchmark and monetary-policy changes; it does not establish what rate a particular borrower would receive.
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Direct and Guaranteed loans differ in who makes and services the loan. FSA county office staff obligate and service Direct loans, whose rates are set monthly based on the government’s cost of funds. For Guaranteed loans, an approved commercial lender services the loan; FSA guarantees up to 95% of principal and interest against borrower default. The lender sets the rate subject to FSA limits and applicable benchmarks. Current rates, eligibility, limits, and terms need to be checked with FSA or a lender.
Why average loan amounts may be rising
Atkinson identifies rising farm input and machinery costs, greater working-capital needs, and farmland appreciation as plausible reasons producers may need more financing. These are explanations for the observed historical averages, not proof of why any individual borrower requested a larger loan.
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Operating costs and working capital
Higher input costs can increase the funds a farm needs to cover a production cycle. Machinery expenses and other operating needs can also raise the amount financed. A larger average operating loan therefore may reflect the scale or cost of financing needs, not necessarily greater discretionary spending.
Farmland values
Atkinson reports that average U.S. farm real estate value per acre increased 89% from 2011 to 2025, citing USDA National Agricultural Statistics Service data. That nationwide change helps explain why financing land could require larger loans, but land values and borrowing needs vary considerably by location.
Loan limits are not the main explanation identified
FSA loan limits rose over the period, but Atkinson says the timing and pattern of average loan growth do not support limit increases as its main driver. Average amounts also changed in years beyond limit adjustments. The analysis cites a 2016 study finding that fewer than 5% of Guaranteed loans in a given year were at the maximum.
What larger loans and higher rates can mean for borrowers
The companion analysis estimates that, between 2018 and 2025, average first-year interest expense rose 72–87% and first-year total loan payments rose 50–62%, depending on loan type. These are comparative estimates, not personalized payment schedules. They assume one annual payment, distribute payments evenly over the loan term, hold the rate fixed for the first year even on variable-rate loans, and exclude balloon payments. See Atkinson’s companion analysis of payment effects.
Higher payments can absorb working capital that might otherwise support farm investment, and may add financial stress—particularly for highly leveraged farms or farms earning below-average profits. Borrowers with short-term or variable-rate debt may feel rate increases sooner, depending on their loan terms and when rates reset.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to compare financing options
A historical average cannot tell a producer which loan is best or what a current offer should cost. When comparing actual options, review the full structure of each loan rather than focusing on the principal or quoted rate alone:
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- Program and purpose: Compare Direct with Guaranteed financing, and distinguish operating loans from farm ownership loans.
- Rate and rate-setting: Ask whether the rate is fixed or variable, which benchmark applies, and how often a variable rate can change.
- Loan terms and cash flow: Compare amount, term, payment schedule, eligibility requirements, and whether repayment timing fits expected farm income.
- Total financing cost: Consider the interest and payment burden over the relevant period, not only the initial loan amount.
- Major purchases: Discuss whether buying, renting, borrowing, or using vendor or third-party financing for equipment makes sense in light of the cost and farm’s cash flow.
- Lender discussion: Ask the lender or FSA office about available options and how the loan’s terms would work under the farm’s expected revenues and expenses.
Atkinson’s figures describe historical FSA averages through 2025; they do not establish current program terms or a borrower’s likely rate. Current information should come directly from FSA or the lender considering the application.
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