FSA has 3 programs lenders use to make and service guaranteed loans.
Lenders who have a positive track record with the FSA guarantee program
may participate in the Preferred
Lender Program (PLP) or the Certified
Lender Program (CLP). Lenders who have little or no experience with FSA guaranteed loans may qualify as
Standard
Eligible Lenders (SEL). Read on for more information and answers to
some Frequently Asked Questions (FAQs) about PLP, CLP, and SEL programs.
The Preferred Lender Program, or PLP, is the top status that a lender
can hold in the FSA guaranteed loan program. PLP was developed to reward
experienced lenders by (1) streamlining and adding flexibility to the loan
application and servicing requirements; (2) expediting loan approval and
other FSA decisions; and (3) allowing lenders to originate and service
guaranteed loans the way they do other loans in their portfolio. Lenders
with "Preferred" status have broad authority in making and servicing FSA
guaranteed loans and can utilize their own underwriting and servicing policies.
Lenders who apply for PLP outline the manner in which they intend to process
and service FSA loan guarantees. This "credit management system" becomes
the basis for approval decisions on applications they submit.
FAQs
Q: How does a lending institution become a
Preferred lender? To attain PLP status, lenders must:
Provide evidence that they meet all Certified Lender Program eligibility
criteria.
Have guaranteed loan losses — net of recovery — that do not exceed
3 percent.
Have closed a minimum of 20 FSA guaranteed farm ownership, soil and
water, and operating loans/lines of credit in the past 5 years.
Demonstrate a consistent, above average ability to process and service
guaranteed loans.
Have an acceptable credit management system (CMS), approved by FSA,
for originating and servicing guaranteed loans. The CMS is based on the
lender’s written credit policies and underwriting standards, loan documentation
requirements, analysis of new loan requests, portfolio management, and
other information. Click
here for an example CMS we prepared to help lenders develop their PLP
applications.
Q. What are the advantages of becoming a PLP lender?
PLP lenders have the flexibility of using their own policies
to administer guaranteed loans, which should minimize the lender's administrative
costs. To apply for an FSA guarantee, the PLP lender need only submit a
one-page application form and a loan narrative discussing the "5 Cs" of
credit. FSA must act upon PLP loan requests within 14 calendar days; otherwise,
the loan will be approved automatically.
Q: Does PLP status last indefinitely?
No. Qualifying lenders are granted PLP status for a 5-year period,
after which they can request a renewal. Renewals are granted if FSA finds
that the PLP lender continues to meet the eligibility criteria and has
acted according to conditions outlined in a Lender's Agreement.
Certified
Lender Program
The Certified Lender Program (CLP) permits lenders with a proven track
record in making and servicing guaranteed loans to operate under streamlined
procedures. CLP lenders are able to use their own forms if they are approved
by FSA, and the information these lenders have to submit to FSA is minimal.
FAQs
Q. How does a lending institution
become a Certified lender? To attain CLP status, lenders
must:
Provide evidence of being a Standard Eligible Lender.
Have closed a minimum of 10 FSA guaranteed loans (farm ownership, soil
and water, and operating loans/lines of credit); 5 of which must have been
closed within the past 2 years.
Have guaranteed loan losses — net of recovery — that do not exceed
7 percent.
Demonstrate the capacity to process and service FSA guaranteed operating
loans /lines of credit.
Certify that the person designated to process and service FSA guaranteed
loans has attended FSA loan processing and servicing training within the
previous 12 months or will attend training within the next 12 months.
Agree to send to annual training the designated person from each of
the lender's offices who is responsible for processing guaranteed loans.
Agree to use forms acceptable to FSA for processing, analyzing, securing
and servicing FSA guaranteed loans/lines of credit. (Lenders should submit
copies of financial statements, cash flow plans, loan agreements, analysis
sheets, security agreements, and promissory notes with their request for
CLP status.)
Q: What are the advantages of becoming a CLP lender?
CLP lenders have the flexibility of using their own forms and many of their
own processes with minimal Agency involvement to administer guarantee loans.
Loan applications are typically approved in 14 days or less.
Q: Does CLP status last indefinitely?
No. Like the Preferred Lender Program, CLP lenders are granted this
status for a 5-year period, after which they can request a renewal. Lenders
must continue to meet the eligibility criteria and show that they have
acted according to conditions outlined in their Lender's Agreement.
Standard
Eligible Lender
A Standard Eligible Lender (SEL) is the basic participant in the guaranteed
loan program. SEL was designed for lenders who have little or no experience
with FSA guaranteed loans. This status is granted for the purpose of allowing
lenders to make and service these loans. After a lender gains experience
with the guaranteed loan program, it can apply for CLP or PLP status.
FAQs
Q. How does a lending institution
become a Standard Eligible Lender? Lenders must be experienced
in making and servicing farm loans and also have the ability to manage
the loan for which they are requesting a guarantee. Lenders' losses and
deficiencies in their guaranteed loan portfolio must be at a level which
indicates to FSA that they can properly administer guaranteed loans. The
lender must be subject to credit examination and supervision by an acceptable
State or Federal regulatory agency and must maintain an office near enough
to the collateral's location so it can properly service the loan.
Q. How long do I have to participate
as an SEL before I can attain status as a CLP or PLP lender? It
depends. To participate in CLP or PLP, lenders must make a minimum number
of guaranteed loans and have losses that do not exceed a specific threshold
(see CLP
or PLP sections of this page for more information). The length of time necessary
to meet the requirements for CLP and PLP depends on how effectively the
lender uses the guarantee program.
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