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Several important USDA lending updates 2026 emerged during the third quarter, with much of the activity centered on Washington rather than major changes to existing USDA loan programs.
The Senate Agriculture Committee advanced its version of the next Farm Bill, Congress provided short-term government funding through December 11, and USDA Rural Development welcomed a confirmed Under Secretary. For rural businesses, agricultural operators, and others considering USDA financing, these developments are worth watching as we move into the final quarter of the year.
Here is what borrowers and businesses should know.
Farm Bill Progress: What Could Change for USDA Financing
The Senate Agriculture Committee advanced the Agricultural Act of 2026 in September after an earlier August vote did not move the legislation forward.
That represents progress, but the legislation has not become law. The House and Senate are working from different Farm Bill proposals, and differences between the two versions would ultimately have to be resolved before any final legislation could reach the President.
The Senate Agriculture Committee has advanced its Farm Bill proposal, but final passage is unlikely before the November midterm elections. Senate Agriculture Committee Chairman John Boozman has said he plans to negotiate with the House in October with the goal of moving a final package through Congress after the midterms. That means the current Farm Bill uncertainty is likely to carry into the lame-duck session.
Several provisions under consideration are particularly relevant to rural financing.
Proposed Caps on USDA Guaranteed Loan Fees
One area where the House and Senate proposals are similar involves fees on certain Rural Development guaranteed loans.
The Senate proposal would cap upfront guarantee fees at 3% and periodic retention fees at 0.75%. The House-passed Farm Bill also contains a proposed 3% cap on the initial guarantee fee.
For borrowers considering USDA financing, greater predictability around guarantee fees could make it easier to estimate transaction costs and evaluate the overall economics of a project.
These provisions remain proposals and should not yet be treated as current USDA program rules.
Proposed Increase in REAP Project Size
The Senate proposal would also increase the maximum Rural Energy for America Program (REAP) project size from $25 million to $50 million.
If enacted, the change could expand financing opportunities for larger qualifying rural energy and energy-efficiency projects.
Proposed Changes to Farm Loan Limits
The Senate proposal would increase Farm Service Agency guaranteed loan limits to $3.5 million for farm ownership loans and $3 million for operating loans, with future limits indexed for inflation.
For agricultural borrowers, higher limits could expand the amount of financing available through FSA-supported structures if the provision becomes law.
Food Supply Chain Financing Remains Part of the Farm Bill Discussion
One proposal we have followed throughout 2026 is the potential return of the Food Supply Chain Guaranteed Loan Program.
The House Farm Bill includes a provision that would reinstate the program as part of the Business & Industry (B&I) framework.
The original Food Supply Chain Guaranteed Loan Program supported qualifying businesses involved in areas such as food aggregation, processing, manufacturing, storage, transportation, wholesale, and distribution.
The current Senate proposal does not contain a corresponding provision, which means the future of the program remains unresolved as the House and Senate continue working through their respective Farm Bill proposals.
For businesses considering food processing, storage, or distribution projects today, the standard USDA B&I program may still provide a financing path depending on project eligibility.
Government Funding Continues Through December 11
Another important development this quarter involves federal funding.
The Continuing Appropriations and Extensions Act, 2027 was signed into law on September 2, providing federal funding through December 11.
For USDA borrowers, the immediate practical takeaway is continuity: Rural Development can continue processing applications and administering its programs while Congress works on longer-term FY2027 appropriations.
December 11 is therefore an important date to watch for businesses with USDA transactions expected to move toward obligation or closing later this year.
Borrowers with projects already in development may benefit from preparing complete documentation early rather than waiting until the next congressional funding deadline approaches.
Glen Smith Takes Leadership of USDA Rural Development
USDA Rural Development also gained confirmed leadership during the third quarter.
Glen R. Smith was confirmed as Under Secretary for Rural Development in August and was officially sworn into the role on August 21.
Smith is an Iowa farmer and agricultural land appraiser who previously served on the Farm Credit Administration Board and chaired the agency from 2019 through 2022.
The Under Secretary oversees an organization responsible for a wide range of rural financing and development programs, including programs supporting business growth, infrastructure, housing, utilities, and community development.
For borrowers and lenders, leadership matters because USDA Rural Development is simultaneously working through several modernization and program-administration initiatives introduced earlier in 2026.
Consistent leadership can help provide direction as those changes continue to move from policy into day-to-day program administration.
What These USDA Lending Updates Mean for Rural Businesses
The third quarter did not bring the same volume of immediate program changes that we saw earlier in 2026, but several developments could shape rural financing in the months ahead.
The key points for businesses are:
- The next Farm Bill continues to move through Congress, but proposed financing provisions are not yet law.
- Both chambers are considering limits on certain USDA guaranteed loan fees.
- The Senate proposal includes higher REAP project limits and higher FSA guaranteed loan limits.
- A House proposal to restore the Food Supply Chain Guaranteed Loan Program remains unresolved.
- Federal funding currently continues through December 11.
- USDA Rural Development now has a confirmed Under Secretary overseeing the agency.
For a business considering USDA financing, the distinction between changes already in effect and proposals still moving through Congress is particularly important.
Financing decisions today should be structured around current USDA program requirements rather than assuming proposed Farm Bill provisions will ultimately become law.
Looking Ahead
At First National Bank of Oklahoma, we continue to monitor USDA lending developments and how changes in Washington may affect rural businesses and financing opportunities.
The fourth quarter will bring several dates and developments worth watching, particularly continued Farm Bill negotiations and the December 11 government funding deadline.
If you have a USDA-eligible project under consideration, now is a good time to review your financing options, project eligibility, and application requirements rather than waiting for legislative changes to be finalized.
Our team has extensive experience with USDA guaranteed lending and can help you understand how current programs may apply to your project.
Schedule a call with our USDA lending team to discuss your opportunity.