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Farm and Small Business Lending
Farm Business Management Update, June 1999
By Gordon Groover of the Department of Agricultural and Applied Economics, Virginia Tech
The U.S. Small Business Administration has released two publications that provide insight into bank lending practices for small farms and business. The studies found that smaller banks with assets of less than $100 million make more than half of the small farm loans. But banks consolidations in 1998 led to a decline of 6.7 percent in the number of these banks. The long-term effect of theses continuing mergers and acquisitions on small farm lending has yet to be determined. In 1998, the total value of small farm loans increased, but the number of loans declined.
The reports also look at the top 57 bank holding companies (BHC) participating in small farm lending. Their participation is an important piece of the picture, especially for the communities in which BHC are buying up smaller banks. The study finds that, while they hold more than two-thirds of all bank assets, these BHCs have only 11.1 percent of the $50.3 billion in small farm loans outstanding. The full reports can be found at the following WWW site: http://www.sbaonline.sba.gov/ADVO/lending/bk_hom98.html#Intro
Contact the author at xgrover@vt.edu .
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