§2075 Short- and Intermediate-term Loans; Participation; Other Financial Assistance; Terms; Conditions; Interest; Security

Summary

Production credit associations may make, guarantee, or join with other lenders to give short- and intermediate-term loans and similar financial help. They can lend to real farmers and ranchers and people who harvest or produce aquatic products for farm or aquatic needs, including some financing for basic processing and marketing tied to the borrower’s operations. If a borrower’s operation supplies less than 20% of the processing or marketing being financed, then the association’s total loans for that kind of processing or marketing cannot be more than 15% of all outstanding loans by all associations in the district at the end of the previous fiscal year. Associations can also lend to rural residents for housing, and to people who provide farm-related services. Housing loans must be for single-family, moderate-priced homes and follow local quality standards. “Rural areas” do not include towns with more than 2,500 people. An association’s housing loans to non-farmers cannot exceed 15% of its outstanding loans at the end of the prior fiscal year unless the district Farm Credit Bank approves; the district-wide total of such loans also cannot exceed 15%. Associations may own or lease equipment to their stockholders. Interest rates, terms, conditions, and required security for these loans are set by standards made by the district Farm Credit Bank board and must follow section 2205. The aim is to give the needed credit at the lowest reasonable cost on a sound business basis, taking into account the association’s cost of money, reserves, expenses, and services. Loan documents may allow changing interest rates over time. The standards can require bank approval for some loan types and can allow lines of credit.