General Information

Seasonal Lending Program

Last Updated: 06.07.2024


Under the seasonal lending program, a depository institution may qualify for funding for up to nine months during the calendar year, to meet seasonal borrowing needs of the communities it serves. The seasonal lending program is for depository institutions with demonstrated liquidity pressures of a seasonal nature and will not normally be available to depository institutions with deposits of $500 million or more. Depository institutions that experience fluctuations in deposits and loans–caused by agriculture, construction, higher education, municipal financing, tourism and other seasonal types of business–frequently qualify for the seasonal lending program.

The Federal Reserve's seasonal credit program is designed to assist small depository institutions in managing significant seasonal swings in their loans and deposits. Seasonal credit is available to depository institutions that can demonstrate a clear pattern of recurring intra-yearly swings in funding needs. Eligible depository institutions are usually located in agricultural or tourist areas. The interest rate applied to seasonal credit is a floating rate based on market rates.

Under the seasonal program, borrowers may obtain longer-term funds from the Discount Window during periods of seasonal need so that they can carry fewer liquid assets during the rest of the year and make more funds available for local lending. To become eligible for seasonal credit, a depository institution must establish a seasonal qualification with its Reserve Bank. A depository institution that anticipates a possible need for seasonal credit is encouraged to contact its Reserve Bank to ascertain its eligibility and make arrangements in advance. Making arrangements does not obligate the depository institution to borrow.

Seasonal credit may be drawn down incrementally as needed; both partial and full prepayments are allowed without penalty. Advances under the seasonal lending program are available daily.

The seasonal lending program was not designed to act as a substitute for core deposit growth. Therefore, depository institutions are expected to meet a portion of their seasonal funding needs from existing liquidity resources. A graduated deductible is subtracted from the estimated seasonal need to determine the amount of seasonal credit that a depository institution may borrow from its Reserve Bank at any given time during the program.

Depository institutions are not permitted to use the program to increase sales of federal funds or to purchase other assets. However, net sales of federal funds are appropriate, as long as they are consistent with the depository institution's normal operating pattern. The maximum levels of net fed funds sales and investments allowed while borrowing under the program are established during the qualification process. Reserve Banks consider the financial condition of any depository institution before granting a seasonal qualification or extending seasonal credit. Critically undercapitalized depository institutions are not eligible for seasonal credit. Undercapitalized or significantly undercapitalized depository institutions may be eligible, but only after careful review of their condition and prospects.




Terms and Features

The interest rate charged on seasonal credit loans is a floating market rate comprised of the average of the federal funds rate and the rate on three-month CDs rounded to the nearest five basis points. The interest rate is reset on the first business day of each two-week reserve maintenance period to reflect movements in market interest rates over the previous maintenance period and applies to all outstanding seasonal credit loans. There are no commitment fees, stock purchase requirements, prepayment penalties, or other expenses or penalties involved in setting up and maintaining a seasonal line of credit.





A depository institution must meet the following requirements to participate in the seasonal lending program:

  • Demonstrate a recurring seasonal need for funds that persists for at least one month;
  • Complete borrowing documentation (in compliance with Operating Circular No. 10) with the Reserve Bank; and
  • Submit weekly data (selected balance sheet items) on Form FR 2046 to the Reserve Bank when borrowing under the seasonal lending program




Completing an Application

An application for the seasonal lending program should be completed well in advance of the anticipated need for funds. As part of the initial application process, a depository institution must provide up to three years of monthly loan and deposit data to the Reserve Bank and may also be asked to provide the prior year's securities owned plus federal funds purchased and sold data. We will analyze this information to determine a depository institution’s eligibility as well as the amount and duration of the approved seasonal credit line. Contact your local Reserve Bank for a seasonal lending program application.