Credit_Analysis_and_Financial_and_Farm_Management_Training_Course_Business.pdf

Statement of Work

Credit Analysis and Financial and Farm Management Training Course

FSA’s Farm Loan Programs (FLP) assists family farmers with temporary financial supervisory assistance to improve their potential to graduate to securing credit from commercial lenders.

FLP’s, are designed to allow borrowers to transition to private commercial credit or other sources of credit in the shortest period of time practicable through the use of supervised credit, including the farm assessment.

The course shall perform/satisfy the following Business Requirements:

1. The course must be accessible over the internet and available 24/7 to participants.

2. The course must provide the instructor the capability to be interactive with participants through single use or combination of live web classes, recorded lessons, chat forums or pod cast.

3. The instructor must be able to provide mentoring and/or assistance to participants as they go through the course.

4. The course must provide the capability for participants to be interactive with each other.

5. The course must provide course work assignments that are designed for individual self-study and/or group exercises or projects.

6. State the estimated number of hours or weeks the participant can expect to devote to the course, section or chapter.

7. The application used to administer the course must provide users with access to a “Help” system, which provides help and instruction on use of features of the application.

8. The course must have set timeframes for all assignments, quizzes and tests.

9. The course must provide a final exam testing function to assess the participant’s comprehension of course.

10. State how the course is graded for assignments, quizzes and tests.

11. The course must provide a retest option for participants with below passing scores on the final exam.

12. The course must allow specified FSA representatives to access the course training and testing records for all FSA participants.

13. The course must accommodate registering FSA participants individually or by class. The first year will require registering individuals or classes close together due to a backlog of

FSA participants required to take the course (150 estimated). The projected number of participants that will be enrolled for subsequent years is 50 - 70.

14. State the number of participants the course or class can accommodated at one time. FSA requires the course or class accommodate a minimum of 35 participants at a time.

15. State how the course will address the fundamentals of the initial credit analysis.

• How to effectively evaluate a loan request

• The 5 C’s of credit

16. State how the course will address the fundamentals of analyzing agricultural business entities.

17. State how the course will address basic agricultural financial statements and how they are used. The course must use FSA specific forms if possible, if not possible, submit a copy of the forms used.

• Balance sheets

FSA-2037 Farm Business Plan Worksheet Balance Sheet – This worksheet is used to gather information from a loan applicant or borrower regarding their assets and liabilities and is used to develop a Farm Business Plan.

• Production based cash flow statements

FSA-2038 Farm Business Plan Worksheet Projected/Actual Income and Expense – The worksheet is used to gather income and expense information from a loan applicant or borrower and is used to develop a Farm Business Plan.

18. State how the course will address Financial Analysis.

• Earnings and capital

• Position and productivity

• Role of contracts in financial planning

• Historical performance

• Tax returns, 1040 as a whole, schedule F and other schedules that might be used to analyze an operation

• Structuring loans to match the operation’s needs.

19. State how the course will address Risk Assessment

• Positive and negative trends in management

• Identify an operations weaknesses

• The operations historical performance

• Ratios and what they mean, specifically:

o TDCLC Ratio (Repayment Capacity) o Return on Assets Ratio (Profitability) o Debt to Asset Ratio (Solvency) o Current Ratio (Liquidity) o Operating Expense Ratio (operating expenses (excluding depreciation and interest) divided by the value of farm production)

20. State how the course will address Collateral Analysis

• The importance of accurate collateral evaluations for crops, livestock and/or equipment

• Machinery and real estate appraisals, their role and how they are used.

21. State how the course will address field/farm inspections as a risk monitoring tool.

22. State how the course will address effective Farm Management.

• Economic and environmental issues impacting farming operations

• Marketing tools, such as forward contracting, hedging, and futures

• Market trends impacting farming operations.

FSA interpretation of farm management is: making and implementing of the decisions involved in organizing and operating an operation for maximum production and profit.

Farm management draws on agricultural economics for information on prices, markets, and agricultural policy.