Commercial Lending Advance

The Bank’s Community Investment Advance provides your financial institution with a useful tool for the business of commercial lending. These funds are offered at a discounted rate to our members to assist them in meeting community development needs in economically depressed areas in both urban and rural communities.

These discounted advances are available for targeted loans that support commercial, industrial, manufacturing, social service and public facility projects. This can include agricultural loans, commercial real estate loans, equipment loans, operating loans and commercial construction and rehabilitation loans. Loans that are short-term or long-term, refinance loans and purchased loan participations are eligible. For more information, see Loan Qualifications.

Advantages

Typically, eligible loans are originated in targeted areas. There are several targeted area designations, but the most common is targeted area by income. Loans for projects outside a targeted area, including loans to small businesses, may also be eligible. (see Loan Qualifications)

 

The minimum borrowing amount is $100,000.

Example

A member is involved in a project to fund a new building and equipment purchase for a local business. The business also relies on the member bank for short-term loans for operating needs. The member has determined that the business is located in a targeted area. The member submitted three applications to FHLB Des Moines for Community Investment Advances to support this business. This included two long-term advances, one for 15 years to support the building purchase and one for five years to support the equipment purchase. The member also took a one year advance to support an operating note. This allowed the member to match funding to reduce his interest rate risk. In addition, the discounted rate helped the member offer attractive interest rates on the loans, building a stronger relationship with the borrower.

Read more about Commercial Lending
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Community Investment