Rural Development: Rural Business-Cooperative Service Business Loan Losses

On January 13, 2000, USDA's Rural Business Cooperative Service issued an Administrative Notice to its state office directors clarifying when feasibility studies are required, and calling attention to the importance of carefully evaluating these studies prior to making lending decisions. The agency also stated that it plans to incorporate this instruction in the federal regulations for the program.

USDA provided training for its Rural Business Service field staff in a nationwide meeting on August 3-4, 1999. The training session was attended by those responsible for administration of USDA's Business and Industry Guaranteed Loan Program, including USDA Rural Development State Office Directors, Program Directors, and Loan Specialists. The agency stated that during the training session, agency officials discussed the importance of feasibility studies for evaluating businesses that had applied for loans. This training session also included training in the evaluation of feasibility studies, and how to distinguish between a properly completed feasibility study and a business plan.