Magazine article American Banker

Agriculture Starts Program to Speed Loan Approvals

Magazine article American Banker

Agriculture Starts Program to Speed Loan Approvals

Article excerpt

NEW ORLEANS -- The U.S. Department of Agriculture Wednesday launched an "approved lender" program similar to that in existence with the Small Business Administration.

Under the program, private lenders will be approved in advance to process Farmers Home Administration-guaranteed loans.

Secretary of Agriculture John R. Block, addressing the annual meeting here of a Independent Bankers Association of America, said the program will speed the processing time for guaranteed farm loans.

"This becomes particularly important as we enter the planting season in most areas of the country," he said. "Participant by private-sector lenders will help the Farmers Home Administration assure that available guaranteed loan funds reach eligile farmers as quickly as possible."

At a press conference after his formal remarks, Mr. Block declined to say how much time will be saved through the new program.

However, Thomas H. Olson, president of Lisco State Bank in Nebraska and chairman of the IBAA's agriculture America committee, said loans guaranteed by the Farmers Home Administration normally take anywhere from 30 to 60 days to process.

The new program could cut the processing time to 10 days, he said. The time can be crucial because may of the loans covered by the program are emergency credits.

"The guaranteed loan program can be of special benefit to those farmers who are caught in a credit availability gap between they do not quite meet either the credit standards of private lenders," Mr. Block said, "nor are they in serious enough financial difficulty to be eligible for consideration by the Farmers Home administration as lender of last resort."

The loans covered in the program can be guaranteed up to 90% by the Farmers Home Administration. The agency also makes direct loans to economically troubled farmers.

Mr. Block had no estimates on how many farmers or banks will be included in the program. …

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