A Comparison of Non-Price Terms of Lending for Small Business and Farm Loans
International Journal of Business and Finance Research, Vol. 5, No. 2, pp. 45-59, 2011
15 Pages Posted: 3 Jul 2011
Date Written: 2011
This study examines differences in terms of lending for small loans among non-farm commercial banks and farm lenders of different sizes. Large farm lenders more frequently require collateral than large commercial banks, while small farm lenders require collateral less frequently than small commercial banks. In addition, there is evidence that small commercial banks require collateral more frequently than large commercial banks. There is no difference in the frequency of collateral use among farm lenders, regardless of size. The type of the collateral used, real estate vs. non-real estate, is also affected by the term of the loan for farm lenders. The longer the term of the loan, the more frequently real estate is used as collateral.
Keywords: farm lending, role of collateral, terms of lending
JEL Classification: G2
Suggested Citation: Suggested Citation