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Release No. 0116.03

Tim McNeilly (202) 720-1019

# **AGREEMENT BRINGS NEW LENDING TOOL TO RURAL LENDERS**

## Agreement To Foster New Business Lending in Rural Areas

WASHINGTON, April 9, 2003 -- Under Secretary for Rural Development
Thomas Dorr today announced that USDA Rural Development has entered into
a Memorandum of Agreement with Colson Services Corp, a subsidiary of
JPMorgan Chase Bank. The agreement will provide greater opportunity for
rural lenders to participate in USDA Rural Development's Business and
Industry (B&I) guaranteed loan program.

"This agreement streamlines the monitoring and selling of business
guaranteed loans on the secondary market and increases the opportunity
for small rural lenders to participate in USDA Rural Development's
business guaranteed loan program," said Dorr. "It is about strengthening
our rural economy and supporting the development of new lending tools to
create business and employment opportunities in rural areas."

Under the agreement, USDA will issue certificates to investors who
purchase guaranteed portions of Rural Development business loans. The
certificates will be available to investors who appoint Colson as a
registrar and paying agent for the guaranteed portions of B&I loans
purchased in the secondary market. Current Rural Development regulations
and documentation support the sale of guaranteed portions in the
secondary market, but there is currently no regulatory authority for a
mandatory central agent to handle loan settlement, certificate issuance
and transfer and payment pass-through services.

While the agreement with Colson is non-exclusive and the use of their
services by investors is voluntary, Dorr said that this agreement brings
Rural Development one step closer to a mandatory central agent concept
for the B&I Program, which would enable USDA to monitor secondary market
sale activity and increase market efficiency. Greater investor interest
in the B&I secondary market program can mean increased loan
originations, as a secondary market brings liquidity to the lenders and
provides an opportunity for them to profit from selling their loans.

The B&I Guaranteed Loan Program helps create jobs and stimulates rural
economies by providing financial backing for rural businesses. The
program provides guarantees of up to 90 percent on loans made by
commercial lenders. Loan proceeds may be used for working capital,
machinery and equipment, buildings and real estate, and certain types of
debt refinancing. USDA Rural Development\'s mission is to deliver
programs in a way that will support increasing economic opportunity and
improve the quality of life of rural residents. Rural Development is
Rural America\'s Venture Capitalist, providing equity, liquidity, and
technical assistance to finance and foster growth in existing and new
opportunities for homeownership, business development, and critical
community and technology infrastructure.

-more-

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Further information on these and other rural programs is available at a
local USDA Rural Development office or by visiting USDA\'s web site at
[http://www.rurdev.usda.gov/.](http://www.rurdev.usda.gov/)

*Colson Services Corp. is a wholly owned non-bank subsidiary of JPMorgan
Chase Bank. More information about Colson is available at
[www.colsonservices.com](http://www.colsonservices.com/).*

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