Guaranteed Purchase Benefits
Growth is Great When it’s
Learn More
- Diversifies your assets, earnings, and risks.
- Loans across all the USA states and territories.
- USDA loans can be nearly any type of rural business.
- Variable, fixed, and ARM rate types with a variety of terms.
- Through many broker/dealers and originators.
Learn More
- Uses originators for acquisition and servicing costs.
- Uses Guaranteed Partners for setup, sourcing, and maintaining the portfolio.
- Relies on the guarantee for quick decision.
- Large loan sizes available.
- Collection of guarantee based on default and not at loss.
- 0% capitalization on principal and interest.
Learn More
- Increases net interest income and Funding Bank patronage.
- No provision for loan losses.
- Non-patronage earnings go to building capital, so your member borrowers don’t have to.
Learn More
- USDA and FSA loans are rural and/or agricultural.
- Provides capital to farmers and our rural communities.
Frequently Asked Questions
If guaranteed purchases are so efficient, why use Guaranteed Partners?
Only 1 in 6 Farm Credit’s (FCs) as of 2024 used their investment authority and were getting the benefit of guaranteed purchases after 5 years of having the authority. Even fewer small and mid-sized FCs used their authority given the 10% limit being a challenge to spreading the expertise needed over the assets that can be purchased.
Use Guaranteed Partners 15 years FC experience, 8 years guaranteed purchase experience building the largest % of assets portfolio in the FC System, tools, and processes to stop missing out on the guaranteed purchase benefits.
See our Strategies page on how Guaranteed Partners can enhance the benefits for any size or type of institution.
How is there around 100 basis points (bps) less cost to purchase loans with Guaranteed Partners compared to originating loans?
Around 2/3rds of savings is lower personal and overhead costs. The rest is less Farm Credit System Insurance Corporation (FCSIC) premiums, Farm Credit Administration (FCA) assessment, and provision for loan losses.
Feel free to contact us to learn more. We are happy to go over the details of these savings with our partners.
How does having 10% of loans in guaranteed purchases provide capital ratios that are over 1.5% higher?
Purchased principal and interest are 0% risk weighted given that purchased guarantees are unconditional guarantees of payment. Instead of higher normally 20% risk weighted originated guarantees that are conditional guarantees of loss. Higher yet unguaranteed 100% risk weighted principal and interest on non-guaranteed loans. Still higher yet commitment loans with unused commitments that also have to be capitalized.
Feel free to contact us to learn more. We are happy to go over the details of the capital benefits of guaranteed purchases with our partners.