Seasonal Lending Program
Last Updated: 12/14/2021Overview
Completing an Application
Interest Rates & Fees
Under the seasonal lending program, a depository institution ("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 institutions with demonstrated liquidity pressures of a seasonal nature and will not normally be available to institutions with deposits of $500 million or more. Institutions that experience fluctuations in deposits and loans–caused by construction, college, farming, resort, municipal financing and other seasonal types of business–frequently qualify for the seasonal lending program.
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, 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 an institution may borrow from its Reserve Bank at any given time during the program.
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 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.
An 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 our Operating Circular #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
All loans made by Reserve Banks must be secured by acceptable collateral. We accept a wide variety of collateral including, but not limited to, U.S. government and agency obligations, municipal securities, CMOs, and commercial, consumer and real estate loans.
Completing an Application1
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, an 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 your eligibility as well as the amount and duration of the approved seasonal credit line.
Interest Rate & Fees
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 every two weeks 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.
How to Contact Us
For additional information on this or any other lending program, collateral arrangements, or borrowing requirements, please contact a Discount Window representative from your Reserve Bank.
1The Reserve Bank in your District may have additional information, including application forms, available on this website. Please visit your Reserve Bank's Contacts & Resources page for more information.