Commercial Bank Usage of the Farm Service Agency Interest Assistance Program
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The Farm Service Agency’s (FSA) interest assistance interest assistance program allows
lenders to enter into an agreement with FSA to subsidize a guaranteed farm operating
loan by reducing the interest rate charged to the borrower by up to four percentage points.
With fiscal 1997-2003 data, an incidental truncation model framework is used to analyze:
1) commercial bank usage of the program; and 2) intensity of commercial bank usage.
The results suggest bank characteristics, farm and non-farm financial characteristics,
region, and time are important factors in determining bank usage of the interest assistance
program and its intensity.