Below are answers to some of the frequently asked questions regarding our Agricultural Production
Loan Deposit program.If you do not find the answer to your question below, please
send
us a note and we will send you an answer.
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- What is the market rate? -
The market rate is set by the Pooled Money Investment Board each morning and is used when investing
state funds, and now the Agricultural Production Loan Deposit fund, with financial institutions.
- How is the market rate calculated? How often does it change? -
The market rate is calculated each morning about 8:30. It is based on an average of (in this case)
1-year U.S. Agency bonds.
- Where I can look at the rate? -
Toll free number 1-800-9RATES9
http://pooledmoneyinvestmentboard.com/agriculture.html
We use the 1 year rate listed on that page.
- When does the bank have to pledge securities to back up the deposits? -
The pledged collateral must be in place before PMIB and the Treasurer wire the funds to the banks.
- Can my bank issue one certificate of deposit for all linked loans? -
No. There must be a separate certificate of deposit for each loan. The CD balance and the loan
balance must be in "sync" at all times.
- Are the loans guaranteed by the State? Farm Services Agency? -
The loans ARE NOT guaranteed by the State. However, according to FSA these loans can
qualify for their guarantee.
- How can I use these funds with my current year operating lines of credit? -
The program does not fit very well with lines of credit since the balance on the CD and the balance on
the loan must be the same at all times.
- Can I use this program for refinancing existing loans? -
Yes, in fact it works very well with carryover operating loans that could be amortized up to 8 years.
- If I make a loan to a borrower under this program, can I also qualify for the tax credit in this
particular loan? -
No. The loan can either be written under this program or you can rewrite the loan with a lower interest
rate and take the tax credit. (Section 12 of HB 2527)
- What does the State consider operating expenses? -
We did not define that term because each financial institution has their own definition. The farmers
currently list certain expenses on their schedule F for the IRS. Also what would you as a lender call
operating expenses.
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[View the Certification Form (PDF)]
[View the Participation Agreement (PDF)]
[View the Certification Form (HTML)]
[View the Participation Agreement (HTML)]
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