USDA Frees Up $333M to Guarantee More Farm Loans

The U.S. Department of Agriculture is freeing up $333 million to meet unprecedented demand for government-backed farm loans.

Agriculture Department Secretary Dan Glickman said last week that the agency is shifting funds from its underused direct-lending program into an indirect program that provides guarantees to banks that lend to farmers. Demand for farm loans is up 70% so far this year, leaving the $1.3 billion indirect program out of money with three months left in the fiscal year.

"We have already exhausted the additional emergency loan and guaranteed operating loan funds provided in the supplemental appropriations bill" signed by President Clinton in May, Mr. Glickman said.

The demand is being fueled by continued low crop prices. Making less on their crops, farmers are borrowing more to keep farms operating.

The banking industry applauded the USDA's decision to reallocate funds. John Blanchfield, manager of the agricultural bankers division at the American Bankers Association, said applications are backed up all over the country because the money to guarantee loans ran out.

"This is going to clear up a huge backlog and get us through the rest of the fiscal year," he said.

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