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.
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.
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.
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.
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.
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.)
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.
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.
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.
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.
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.