the following minimal criteria for the design of a state 

 loan linked deposit program: -^^ 



(1) The state program should supplement and not 

 supplant other farm lenders. Even the 

 largest program would be small compared to 

 the total financing demands of agriculture. 



(2) The program should be limited to refinancing 

 and for operating loans. These are considered 

 the highest priority for farmers who are 

 struggling to remain in operation. 



(3) Loan eligibility should be restricted to 

 farmers who are experiencing financial 

 difficulty and who cannot find financing from 

 other sources. Those farmers not in financial 

 distress and those who cannot succeed in 

 farming even with assistance should be 

 excluded. s 



(4) The benefit to banks needs to be carefully 

 considered. The lower cost of state funds 

 must be compared to the required discount 

 banks must make on program loans. The spread 

 between the cost of state funds and the 

 program loan rate must provide a financial 

 incentive sufficient to gain lender 

 participation in the program. 



Similar Policies and Programs 



As of October 1985, six states had established a 

 linked deposit program to assist agricultural borrowers. 

 These programs are described as follows: ■'■^ 



4M 



