Semi-weekly herald., 1917-01-18
How to Get a Loan
Under Farm Loan Act.
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No one farmer can borrow more
than $4,000 nor less than $lO0. No
National Farm Loan association may
start with aggregate loans of less
than $4,000.
If John Smith, a farmer, desires to
borrow $1,000 he invests in the stock
of his local loan association one
twentieth Of this amount, or $100.
His association then invests this
money in the stock Of the Federal
Land Bank, enabling it thus to in
crease its capital 80 as to make an
other loan Of $1,000 to some other
farmer. The borrower. gets his in
vestment back when he pays off his
loan, or he may turn it in as the last
payment on his loan.
Farmers are required to form
these organizations SO that they
eventually will control the Federal
Land Banks. Each loan association
fOLCS III buS CACStion VI b1iG hilCIkpiD
of its Federal Land Bank. Each as
sociation has loan committee which
values the land Of its members sub
ject to the approval of the land ap-
praiser and the Federal Land Bank.
Each association has board of direc-
tors which has the power to exclude
or admit new members by two
thirds vote. 1t il thru this local
loan association that the farmer in
vests the money to be used for in
creasing the capital stock of the Fed
eral Land Banks, and this is how the
farmer comes into possession of his
own banking System.
Farmers are permitted to borrow
up to ~ per cent OF the appraised
value Of their land and 70 per cent
OF the appraised value OF their land
and " per cent OF the appraised val
ue OF the permanent insured i'm
provements thereon.
1t Is not necessary for borrower
to be an actual land owner when he
joins, but the landless man must
use Tue borrowed money to purchase
land winch ne intends TO immediately
begin farming.
how Aiur.x.xss Are Gradually Re-
tired Unasr The Farm Loan Act.
One OF the features OF the Federal
Farm Loan Act which makes a
strong appeal to formers is that it
compels tnem gradually to retire
their indebtedness thru long or
snort period of years.
This process is called amortization.
Under It tae interest and principal
are paid OF in equal annual or semi
annual instsllinents thruout the per-
iod Of the loan 80 that at the end
Of the term Of the mortgage the bor-
rover is out Of debt, /,
All loans under the Farm Loan
Act are made under the amortization
or installment plan. Since the bor-
rover begins paying of his debt the
first year after he gets it, and be-
cause long time loan is best suited
to farmers, borrowers under this act
are permitted to execute mortgages
to run from five to forty years at
their option.
Permission II given to pay all of
the loan or any part of it on any in
terest paying date after the mort
gagte has run five years. Borrowers
are not permitted to pay off within
the first five years, because the
money which they have borrowed has
been procured by the bank thru the
sale of it, bonds, and bonds cannot
be sold for = shorter period than 6
years.
To give the prospective borrower
an exact idea of the size of annual
payments required to wipe out a
mortgage in given period, tables
have been prepared. The following
table showe the amount of the an
nuadl payment required to extinguish
in the period indicated 81 900 loan
bearing interest at 5, 1-2 and per
cent.
Term (Years) Rater of Interest
s pct. 51-2 pct. pct.