DEFINITION of 'Production Credit Association - PCA'

A federal instrumentality created by Congress through the Farm Credit Act of 1933 to provide short- and intermediate-term credit to farmers, ranchers and rural residents. The credit was extended so the recipients could purchase housing, perform marketing activities, purchase farm equipment and livestock and operate farm-related businesses. At the time, credit was either not available or was available only at prohibitively high interest rates because of the Great Depression. Farmland and commodities weren't worth as much, and banks already had lots of agricultural loans on their books.

Production credit associations can make or guarantee loans whose terms do not exceed seven, 10 or 15 years, depending on the funding bank's policies. The loan must be amortized over 15 or fewer years, and any refinancing may not extend the loan term further than 15 years from the original loan date.

BREAKING DOWN 'Production Credit Association - PCA'

The Farm Credit System, a government-sponsored enterprise established in 1916, provides financing and financial services related to agriculture and includes a number of credit organizations. In addition to production credit associations, these include agricultural credit associations, agricultural credit banks, banks for cooperatives, farm credit banks, federal intermediate credit banks, federal land bank associations and federal land credit associations. PCAs get their funding from farm credit banks and own their loan assets. The Farm Credit System raises money by selling debt securities to investors in the U.S. and abroad.

RELATED TERMS
  1. Banks For Cooperatives

    Established by the Farm Credit Act of 1933, these regional, privately-owned ...
  2. Farm Credit System - FCS

    The Farm Credit System is a nationwide network of cooperative ...
  3. Federal Farm Credit System - FFCS

    In the United States, a network of federally chartered financial ...
  4. Credit Rating

    An assessment of the creditworthiness of a borrower in general ...
  5. Trade Credit

    An agreement where a customer can purchase goods on account (without ...
  6. Agricultural Credit

    Any of several credit vehicles used to finance agricultural transactions, ...
Related Articles
  1. Insights

    How To Invest In Farming Without Owning a Farm

    Investors have a number of ways to get exposure to the agriculture and farming sector besides actually having to buy a farm.
  2. Personal Finance

    The Basics of Lines of Credit

    Lines of credit are potentially useful hybrids of credit cards and normal loans. Learn how a line of credit can help (and hurt) your finances, and how to find the best one to suit your needs. ...
  3. Small Business

    How To Increase Your Appeal To Prospective Lenders

    Making a business eligible for loans/credit cards at the best possible rates requires crafting an excellent credit profile through the smart use of credit.
  4. Personal Finance

    Is Your Credit Score at 850? It Can Be!

    Use these tips to increase your credit score and your ability to get low interest rates on loans.
  5. Personal Finance

    How To Establish A Credit History

    Can't get a credit card without a credit history, and can't get a history without a card? Break the Catch-22.
  6. Personal Finance

    6 Ways To Build Credit Without A Credit Card

    It's definitely possible – if a bit more complicated – to build a credit history without traditional credit cards. Just follow these steps.
  7. Personal Finance

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  8. Insights

    Smart Farming Technology Storms Silicon Valley

    Silicon Valley may be known for growing tech startups, but now the iconic region is welcoming an entirely new breed of residents, startups focusing on smart farming.
  9. Personal Finance

    Take the Right Steps to Build Excellent Credit

    There are several things you can do to protect and improve your credit score.
  10. Personal Finance

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
RELATED FAQS
  1. What is the difference between a loan and a line of credit?

    Learn to differentiate between lines of credit and standard loans, and determine when you are likely to use each method of ... Read Answer >>
  2. What are some good alternatives to taking out a line of credit?

    Read more about how opening a line of credit might not be the best answer for you and determine available alternatives if ... Read Answer >>
  3. What are the benefits of credit ratings?

    Credit ratings are an important tool for borrowers to gain access to loans and debt. Good credit ratings allow borrowers ... Read Answer >>
  4. Why don't I have a credit score?

    Learn about some of the reasons why you might not have a credit score, and find out how you can build a good credit score ... Read Answer >>
  5. What is the difference between "closed end credit" and a "line of credit?"

    Find out about the difference between closed-end credit and lines of credit, and how both closed- and open-end credit is ... Read Answer >>
  6. Can a Best Buy credit card help you build credit?

    Learn about how using a Best Buy credit card responsibly can lead to a higher credit score and lower interest rates on mortgages ... Read Answer >>
Hot Definitions
  1. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  2. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  3. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  4. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  5. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  6. Indirect Tax

    A tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. An ...
Trading Center