Seasonal Credit Is Available for Community Banks

The Federal Reserve offers seasonal credit to help qualifying community banks meet the seasonal needs of their local customers. Community banks that experience yearly fluctuations in their deposits and loans-caused by construction, farming, college or resort activities, municipal financing and other seasonal businesses-frequently qualify.

Banks can use their seasonal credit line either as a primary seasonal funding source or as backstop credit. Once established, credit may be drawn down incrementally as needed, and partial and full prepayments are allowed without penalty.

There is no expense involved in setting up or maintaining the seasonal line; however, all Federal Reserve loans must be secured to the Fed's satisfaction, and a flexible, market-based rate is applied to all outstanding loans.

To qualify, an institution must: be in sound financial condition, meet the general requirements of the program, complete an application that includes no more than three years of monthly deposits and loans, and include the monthly amount of credit it anticipates for the upcoming season.

If you would like to learn more about the program or obtain answers to questions you may have about collateral or the borrowing relationship, call our Credit office at 1-866-666-8316 or send an e-mail to creditoffice@stls.frb.org. For an application and a brochure, visit our web site, www.stlouisfed.org/banking/credit/.

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