Few Farmers Aided by U.S. Loan Program

Only 61 American farmers have been helped so far by a Reagan Administration loan guarantee program to help banks restructure their most troubled farm loans, the Agriculture Department said Saturday.

Joe O’Neill, a spokesman for the department’s Farmers Home Administration, said about $8.4 million in the special guarantees has been issued since the fiscal year began last Oct. 1.

“Banks are not coming into the program as quickly as we might have expected,” O’Neill said. “One possibility is that it is taking some time for banks to process applications.”

Frank Naylor, undersecretary of agriculture in charge of farm loans, said that many rural banks are sending debt-strapped farmers to the Farmers Home Administration rather than taking advantage of the program.

Through February, he said, a “very high” 40% of all direct loans the agency made were to farmers who turned to the agency for the first time.

He said in an interview that banks who profited in agriculture’s boom years of the 1970s should stick with borrowers during current tough times.

O’Neill also said rural banks holding delinquent farm loans may have put off applying for the guarantees until they were able to see whether President Reagan would veto a program Congress recently passed and sent to the White House.

The President did veto that proposal, which would have authorized the federal government to pay part of the interest rate on shaky farm loans.

O’Neill said the total of $650 million in loan guarantees has been set aside this year, and about $80 million of that has already been used for regular loan guarantees. He said the $8.4 million is part of the Special Debt Adjustment Program set aside for worst cases.