FR2028_20200721_omb

Supporting Statement for the
Survey of Small Business and Farm Lending
(FR 2028; OMB No. 7100-0061)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years, with
revision, the Survey of Small Business and Farm Lending (SSBFL) (FR 2028; OMB No.
7100-0061). This information collection comprises of the following three reports:
 Survey of Terms of Bank Lending to Farmers (FR 2028B),
 Prime Rate Supplement of Survey of Terms of Lending (FR 2028S), and
 Small Business Lending Survey (FR 2028D).
The SSBFL (previously the Survey of Terms of Lending) collects unique information
concerning price and certain nonprice terms of loans made to businesses and farmers each
quarter (February, May, August, and November). The FR 2028B collects detailed data on
individual loans funded during the first full business week of the mid-month of each quarter and
the FR 2028S collects the prime interest rate for each day of the survey week from FR 2028B
respondents. The FR 2028D provides focused and enhanced information on small business
lending including rates, terms, credit availability, and reasons for their changes. The FR 2028D
collects quarterly average quantitative data on terms of small business loans and qualitative
information on changes and the reasons for changes in the terms of lending. From these sample
SSBFL data, estimates of the terms of business loans and farm loans extended are constructed.
The aggregate estimates for business loans are published in the Federal Reserve Bank of Kansas
City’s quarterly release, Small Business Lending Survey, and aggregate estimates for farm loans
are published in the statistical release, Agricultural Finance Databook.
The Federal Reserve implemented changes to the form and instructions of the FR 2028D.
The revisions consist of deleting and adding items, and modifying or clarifying instructions of
existing data items. The Federal Reserve is making most of these changes in an effort to reduce
reporting burden for firms, clarify the expectations around and the intent of reporting instructions
and requirements, and to improve data quality. A limited number of revisions would add items to
increase clarity in quantitative loan data. The revisions are effective for the December 31, 2020,
as-of date with the transmission period beginning on January 18, 2021, based on loan activity
over the fourth quarter 2020. No changes are being made to the FR 2028B and FR 2028S.
The current estimated total annual burden for the FR 2028 is 3,888 hours, and would
increase to 6,276 hours. While changes to the FR 2028D would result in significant burden
reduction, the initial estimate of 1.5 hours per response calculated in 2017 was understated by
approximately 4.5 hours. Consequently, the revisions would result in an increase of 2,388 hours.
The draft form and instructions are available on the Board’s public website at
https://www.federalreserve.gov/apps/reportforms/review.aspx.

Background and Justification
Analyses of the SSBFL data provide estimates of the cost of important segments of
nonfarm business and agricultural credit at banks that are representative of banking institutions
nationwide. Currently, it is the Federal Reserve’s only available source of data on bank loan
pricing for individual loans of all sizes to nonfarm businesses and farmers. Since its inception in
February 1977, the SSBFL has been periodically revised to accommodate changes in lending
practices.
The FR 2028A, which is now inactive, was designed to allow the Federal Reserve to
measure the cost of nonfarm business borrowing from banks and to assess conditions and
analyze developments in nonfarm business credit markets. It replaced the Quarterly Interest Rate
Survey and portions of the Survey of Selected Interest Rates of the Committee on Interest and
Dividends (CID survey). It was designed to provide more accurate and detailed information on
nonfarm business loans, especially concerning maturity and nonprice terms, than the previous
surveys. Limitations in the FR 2028A data for assessing conditions and analyzing developments
in nonfarm business credit markets precipitated a study of alternative small business loan data
sources. The primary finding of the study indicated that no existing data collection met policy
needs for understanding and addressing policy issues and questions. The FR 2028A was
discontinued in 2017 with the final collection occurring in the May survey week.
The FR 2028B also has undergone several modifications in recent years. In 1997, interest
rate adjustments and maturity items were added and redefined, and a risk-rating item was added
to the collection. In addition, the prime rate supplement data (FR 2028S), which previously had
been collected just from respondents to the FR 2028A, were collected from FR 2028B
respondents. In 2006, the minimum size of loans reported was increased to $3,000 from $1,000,
a level at which it had been held since the SSBFL’s inception in 1977. The adjustment reflected
price inflation over the intervening period and the increased use of business credit cards,
developments that likely had added significantly to the burden of reporting small loan amounts.
In August 2012, the FR 2028B added an item to collect the state where the borrower is
headquartered.
In July 2017, the FR 2028D data collection was approved by the Board to address gaps in
surveys on small business lending with the first survey period as of December 31, 2017. The
FR 2028D is a quarterly collection of quantitative and qualitative information used to understand
credit market conditions for bank lending to small businesses. The survey captures detailed,
comprehensive information that is not otherwise available about small business lending and how
it changes from quarter to quarter.
Description of Information Collection
Survey of Terms of Bank Lending to Farmers (FR 2028B)
This survey collects basic information that the Federal Reserve uses to monitor financial
developments in the agricultural sector of the economy. For example, the data were invaluable
during the period of financial stress for many farmers and farm lenders that began early in the

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1980s. When that stress began to ease, the severe drought that developed in mid-1988 renewed
concerns about the financial health of the farm sector. The SSBFL provided a timely indicator of
the possible effects of the drought on the terms of loans for various purposes. More recently, the
SSBFL has been able to identify turning points in agricultural lending activity. For example,
agricultural loan demand strengthened in 2011 when farm input prices rose, and again in 2014
when a steep drop in crop commodity prices boosted the need for short-term financing for
operating expenses and record high feeder livestock prices drove a sharp rise in the volume of
loans made to the livestock sector.
The FR 2028B collects information on farm financial developments that is frequently
used by the Federal Reserve in congressional testimony, meetings with legislators, and
discussions with farm groups, as well as in response to information requests from the Congress,
other government agencies, the media, and academics.
Data from the FR 2028B have been very useful in monitoring the ongoing adjustment of
rural banks to the more volatile supply of, and demand for, loan funds of recent years. In 1978,
bank regulators removed fixed ceilings on interest rates paid on certain retail deposits, which
were most prevalent at rural banks, leading these small banks to compete more vigorously for
deposits. Since that time the agricultural sector—the underlying source of prosperity in many
small communities—has experienced large swings in farm income, asset values, and rates of
resource utilization. Data from the FR 2028B on the level and distribution of loan maturities and
loan rates among smaller banks have provided a useful indicator of the degree to which these
additional sources of risk have been passed through to rural borrowers.
The FR 2028B collects unique information on lending terms for farm borrowers, and the
availability of a historical series on farm lending frequently proves useful in addressing new
questions that arise. For example, the data have been quite useful in providing a scale to measure
the amount of government subsidy that is provided to farmers through governmental or quasigovernmental agencies. Legislation passed in 1987 to assist the Farm Credit System (FCS)
forbade the FCS from offering unusually low rates of interest by basing the interest rate it
charged on farm loans on its average cost of funds rather than its marginal cost. Aggregate
estimates from the FR 2028B data provided a useful benchmark in a General Accounting Office
study of the FCS’s performance in this regard (GAO-94-39, March 1994). The aggregate
FR 2028B data also have been used in recent years by analysts at the Department of Agriculture
to monitor compliance with the North American Free Trade Agreement by estimating the
magnitude of farm subsidies arising from loans to U.S. farmers from the FCS and the Farmers’
Home Administration. In addition, the Federal Reserve has used the information on farm lending
terms and the risk ratings for individual loans to examine the degree to which commercial banks
price the riskiness of agricultural loans. This study found that only about half of the reporters for
the FR 2028B used a risk rating system, but most of the banks that did not were quite small, and
so roughly four-fifths of the survey loans carried an informative risk rating. Furthermore, after
controlling for the size and performance of the bank and as many nonprice terms of the loan as
possible, banks consistently charged higher rates of interest for farm loans that they characterized

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as riskier.1 The FR 2028B data have also been used to analyze recent farm debt trends in relation
to historical agricultural boom and bust cycles.2
Prime Rate Supplement to Survey of Terms of Lending (FR 2028S)
The FR 2028S is completed by banks that file the FR 2028B. The prime rate, an
administered rate, remains the base rate banks use to price a significant portion of the loans
covered by the FR 2028B.3 The prime rate is by far the most common base rate used to price
variable rate business and farm loans at small and medium-sized banks. Even for large borrowers
and the largest banks, the prime rate is a pricing option frequently available along with marketrelated rates. The FR 2028S imposes little burden and the information it provides is useful in
interpreting movements in rates charged on business and farm loans, especially for small loans
and for loans at smaller banks. It also provides valuable information about variations in the
prime-lending rate across banks, which can be considerable.
Small Business Lending Survey (FR 2028D)
The FR 2028D collects quantitative and qualitative information that the Federal Reserve
uses to monitor developments in the availability of credit to small businesses. Bank lending to
small businesses is critical for employment and economic growth at the local, regional, and
national levels because it is a primary source of funding for these businesses. The FR 2028D was
created due to the inability to answer basic policy questions raised by Federal Reserve
policymakers on small business credit during the recent financial crisis and subsequent recovery.
It also contributes to a better understanding of the role of community banks in providing loans to
small businesses and on small business access to credit in local communities. The survey is
timed to make reports on developments in small business lending available for the second FOMC
meeting of each quarter. The data is also available for Federal Reserve System economists and
other staff to use for research purposes.
The FR 2028D improves the ability to assess and analyze developments in nonfarm small
business credit markets and to answer policy questions in a timely manner. The information
collected is not available from existing or planned surveys conducted by either the private or
public sectors. The survey collects unique, quarterly quantitative and qualitative information on
nonfarm small business lending that improves upon the information previously collected by the
FR 2028A. The quantitative information is similar to the data in the FR 2028A, but the
FR 2028D collects quarterly amounts or average levels of the data items as opposed to individual
loan information from a survey week. As a result, the quantitative information is less costly to
report and less impacted by idiosyncratic events. The qualitative questions provide information
on changes in loan demand, credit standards and terms, and credit quality of applicants and
Nick Walraven and Peter Barry (2004) “Bank Risk Ratings and the Pricing of Agricultural Loans.” Agricultural
Finance Review, Vol. 64, No. 2, pp. 107-118.
2
Jason Henderson and Nathan Kauffman (2013) “Farm Investment and Leverage Cycles: Will This Time Be
Different?” Federal Reserve Bank of Kansas City Economic Review, Second Quarter, pp. 89-114.
3
The FR 2028S defines the prime rate to be, “[T]he administered rate used [by the bank] for pricing business and
other credit, which [is adjusted] from time to time in response to changes in market conditions. [The] institution may
set this rate internally or may adopt as its own a published rate.”
1

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reasons for the changes. Information on the reasons for denying a small business loan application
are also collected.
The FR 2028D also improves upon current information on outstanding loans collected on
the Report of Condition and Income (Call Reports) (FFIEC 031, FFIEC 041, and FFIEC 051;
OMB No. 7100-0036), which collects data on loans less than a certain dollar amount rather than
on loans to small businesses. The Call Report data may result in information distortions about the
availability of credit to small businesses because not all small loans are made to small
businesses.
The FR 2028D collects quantitative and qualitative information on loans to small
businesses from a stratified sample of up to 398 banking institutions. The survey is administered
at a quarterly frequency and distributed during the first month of each quarter. Survey responses
are based on loan activity over the previous quarter. Quantitative information collected includes
the aggregate number and dollar amount of outstanding loans and new loans extended by banks
to small businesses each quarter, as well as line-of-credit drawdowns and the average interest
rate. Loans are separated into two categories: term loans and lines of credit, with each category
further separated into fixed rate and variable rate. Additionally, quantitative information on loan
maturity and the use of interest rate floors is collected. The FR 2028D also collects quantitative
information on applications approved during the survey quarter.
Qualitative information collected by the FR 2028D includes questions to gauge changes
in lending terms, loan demand, and credit standards for small business loans during the survey
period.4 Furthermore, respondents are asked to identify possible reasons for indicated changes in
lending terms or credit standards. The survey also includes qualitative questions on the demand
for small business loans, changes in credit line usage, and changes in the credit quality of small
business loan applicants. Respondents are asked to identify potential factors underlying a
reported change in applicant credit quality (e.g. credit scores, quality of collateral) and to identify
top reasons for denying small business loans during the survey quarter.
The FR 2028D data collection addresses the gaps in existing and planned new surveys on
small business lending. In addition, other Federal Reserve reports that have been developed in
recent years provide information on large nonfarm business loans. As a result, the information
used for assessing and analyzing developments in nonfarm business credit markets would be
improved by combining the FR 2028D data collection on the terms of small business loans with
the existing reports on large business loans.

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The inclusion of qualitative questions, which are the same as those in the Senior Loan Officer Opinion Survey on
Bank Lending Practices (FR 2018; OMB No. 7100-0058), is meant to supplement the existing FR 2018 data to get a
more comprehensive view of the availability of credit to businesses. Importantly, the definitions of a small business
are different in the FR 2018 and the FR 2028D. The FR 2018 covers lending to both small and large firms and
defines small firms as those with annual sales of less than $50 million, which is significantly larger than the $5
million threshold in the FR 2028D. Furthermore, the FR 2018 panel only includes large institutions while the
FR 2028D panel is a stratified sample of up to 398 domestic banks and include institutions of all sizes. Therefore,
there is not much overlap in the panels for the two data collections.

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Respondent panel
The FR 2028B panel has an authorized size of 250 domestically chartered commercial
banks. The panel of banks has been drawn from a random sample of banks stratified according to
farm loan volumes since 1989. Since that time, the authorized size of the panel has been 250
banks, with 202 banks currently reporting. The number of respondents is less than the authorized
size due to mergers among reporters and loss of respondents due to the voluntary nature of the
panel. Table 1 presents the number of reporters disaggregated by Federal Reserve District and by
bank-size group for the current panel. If the authorized size of the panel is reduced to 202, the
standard errors for the data items would increase 11 percentage points. Moreover, the standard
errors on the regional estimates, which are based on smaller samples, likely would be greatly
increased. In addition, the Federal Reserve has implemented an on-going effort to recruit new
reporting banks and expand the panel to the authorized size of 250. Consequently, the
recommendation is not to change the authorized number of banks.
Table 1
Number of Reporters on FR 2028B and FR 2028S

District
1
2
3
4
5
6
7
8
9
10
11
12
TOTAL

Number of Small
FR 2028B and
FR 2028S
Respondents5
0
0
0
16
4
4
29
22
13
38
11
3
140

Number of Large
FR 2028B and
FR 2028S
Respondents6
0
2
3
13
2
5
4
6
3
10
9
5
62

The authorized panel for the FR 2028D panel is 398 domestically chartered commercial
banks. The size is based on obtaining survey results with a 95% confidence level and 5%
standard error, allowing for a 10% nonresponse rate. The panel of banks is a random sample of
banks stratified according to the dollar volumes of commercial and industrial loans with original
amounts of $1,000,000 or less. Table 2 presents the current number of reporters disaggregated by
district and by bank size group for the panel.

5
6

Institutions with total consolidated assets less than $600 million.
Institutions with total consolidated assets of $600 million or more.

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The number of respondents is less than the authorized panel size due primarily to the
voluntary nature of the report, its current reporting burden, and because it is a relatively new
survey. Revisions to the FR 2028D will decrease current burden and make it easier to recruit and
retain additional respondents. If the authorized size of the panel is reduced to 126, the standard
errors for the data items would increase 77 percentage points.
Table 2
Number of Reporters on FR 2028D Panel
Number of Small
District
FR 2028D
Respondents7
1
0
2
0
3
0
4
1
5
3
6
3
7
9
8
2
9
3
10
10
11
3
12
1
TOTAL
35

Number of Large
FR 2028D
Respondents8
5
7
3
12
8
9
11
4
2
8
9
13
91

Revisions to the FR 2028D
The Federal Reserve implemented revisions to the FR 2028D reporting requirements,
forms and instructions, to be effective for the December 31, 2020, as-of date with the
transmission period beginning on January 18, 2021, based on loan activity over the fourth quarter
2020. Most of the revisions are minimizing burden on respondents. These changes include
removing items related to base lending rates, secured loans and loan guarantees. Additionally,
questions related to low and moderate income (LMI) tracts have been removed from the survey
as have two qualitative questions ranking the relative weight of certain survey responses. A
question related to credit card loans has been added to the survey for those respondents with an
asset size of greater than $10 billion. Changes to the instructions are clarifying in nature or
address changes to the form. One change broadens the definition of small business lending to
allow institutions that do not track borrowers’ organization revenue to participate in the survey.
Additionally, revisions have been made to the Frequently Asked Questions section to increase
clarity of form definitions.

7
8

Institutions with total consolidated assets less than $600 million.
Institutions with total consolidated assets of $600 million or more.

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Small Business Lending Survey Form Deletions
Questions determined to provide lower value, in comparison to the burden imposed on
respondents required to track and respond, would be removed from the survey. Survey questions
related to weighted average base rates and the number and dollar amount of secured would be
removed, eliminating 12 questions each for fixed rate and variable rate small business
commercial and industrial (C&I) loans. Questions related to loan guarantees, including those
referencing Small Business Administration loans, would also be removed, a reduction of 22
questions for fixed rate loans and 16 questions for variable rate loans. Four questions each were
removed for fixed rate and variable rate loans regarding number of loans at the interest rate floor,
and five questions related to LMI tracts for Community Reinvestment Act purposes would be
removed. Finally, two questions ranking the relative weight of certain survey responses would be
eliminated.
Small Business Lending Survey Form Additions
For institutions with an asset size greater than $10 billion, questions related to credit card
lending would be added to the survey. These six questions each for fixed and variable rate
lending would be added for the purpose of improving clarity in small business C&I lending and
to identify situations where interest rates on credit card loans may skew data on weighted
average interest rates. Additionally, an option to choose secured overnight financing rate (SOFR)
as an institution’s base rate for C&I small business lending would be added to questions 1 and 2
of the survey.
Survey Period
The Federal Reserve made a change to begin the transmission period two weeks earlier to
extend the transmission time for respondents to 28 calendar days, allowing additional time for
reporters to prepare and transmit data.
Time Schedule for Information Collection
The FR 2028B and FR 2028S are filed every mid-quarter as of February, May, August,
and November. The FR 2028D transmission period begins two weeks prior to the first business
day of the second month of each quarter (February, May, August, and November) and concludes
28 calendar days later.
Public Availability of Data
The Federal Reserve Bank of Kansas City publishes aggregated data for the FR 2028B
and FR 2028D in separate quarterly statistical releases on its public website at
https://www.kansascityfed.org/research/indicatorsdata. Aggregate information on farm loans
from the FR 2028B is also published in the quarterly statistical release, Agricultural Finance
Databook, https://www.kansascityfed.org/research/indicatorsdata/agcreditsurvey. The survey
results are also included in statistical compilations published both within and outside the Federal
Reserve. Aggregate information on small business loans from the FR 2028D is published in a

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quarterly statistical release approximately ten weeks after the transmission period begins on the
Federal Reserve Bank of Kansas City’s public website,
https://www.kansascityfed.org/research/indicatorsdata/smallbusinesslendingsurvey, and on the
Board’s website, https://www.federalreserve.gov/data.htm.
Legal Status
The FR 2028 is authorized by section 11(a)(2) of the Federal Reserve Act (12 U.S.C. §
248(a)(2)), which authorizes the Board to require any depository institution to make such reports
of its assets and liabilities as the Board may determine to be necessary or desirable to enable the
Board to discharge its responsibilities to monitor and control monetary and credit aggregates.
The FR 2028 survey submissions are voluntary.
Individual respondents may request that information submitted to the Board through a
survey under FR 2028 be kept confidential. If a respondent requests confidential treatment, the
Board will determine whether the information is entitled to confidential treatment on a case-bycase basis. The Board will consider whether information collected through these surveys may be
kept confidential under exemption 4 for the Freedom of Information Act (FOIA), which protects
privileged or confidential commercial or financial information (5 U.S.C. § 552(b)(4)), or any
other applicable FOIA exemption.
Consultation Outside the Agency
There has been no consultation outside the Federal Reserve System.
Public Comments
On March 2, 2020, the Board published an initial notice in the Federal Register
(85 FR 12298) requesting public comment for 60 days on the extension, with revision, of the
FR 2028. The comment period for this notice expired on May 1, 2020. The Board received two
comment letters from 2 banks.
One commenter stated that the survey is burdensome and made a suggestion on how to
reduce burden by formatting the requested data in a form that can be more easily automated and
uploaded. Most of the revisions to the survey are intended to reduce respondent burden while
still maintaining the survey’s core purpose, which is to provide economists, policymakers, and
the general public with crucial small business lending data. These revisions include the removal
of over 35% of the survey line items and further clarification to the definition of a small business
loan. These revisions should alleviate some of the burden incurred while gathering survey data.
The current format of the data is used to collect the valuable qualitative data as well as the
quantitative data. However, the Federal Reserve is exploring opportunities to move the survey to
an automated platform that increases standardization of the data collection with other series
collected by the Federal Reserve’s Statistics business line. Another commenter supported the
proposed revisions. The Board adopted the extension, with revision, of the FR 2028 as originally
proposed effective for the December 31, 2020, as-of date.

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On July 21, 2020, the Board published a final notice in the Federal Register (85 FR
44079).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR 2028 reports is
3,888 hours and would increase to 6,276 hours with the proposed revisions. Based on initial
feedback received from senior officers at the six banks that provided comments on the FR 2028D
survey instrument in 2017, the estimated average hours per response for the proposed FR 2028D
was calculated at 1.5 hours. However, feedback from respondents after the implementation of the
survey indicated that the average hours per response was 6 hours. The estimated burden for the
revised FR 2028D survey is 3 hours. As a result, the net reporting burden would increase 2,388
hours. These reporting requirements represent less than 1 percent of the Board’s total paperwork
burden.
Estimated
number of
respondents9

Annual
frequency

250
250
398

4
4
4

1.4
0.1
1.5

1,400
100
2,388
3,888

250
250
398

4
4
4

1.4
0.1
3.0

Proposed Total

1,400
100
4,776
6,276

Change

2,388

FR 2028
Current
FR 2028B
FR 2028S
FR 2028D

Estimated
Estimated
average hours annual burden
per response
hours

Current Total
Proposed
FR 2028B
FR 2028S
FR 2028D

The estimated total annual cost to the public for the FR 2028 survey is $224,532 and
would increase to $362,439 with the revisions.10
Sensitive Questions
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Of the actual respondents, 140 for the FR 2028B and FR 2028S and 35 for the FR 2028D are considered small
entities as defined by the Small Business Administration (i.e., entities with less than $600 million in total assets),
https://www.sba.gov/document/support--table-size-standards. There are no special accommodations given to
mitigate the burden on small institutions
10
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $20, 45% Financial Managers at
$71, 15% Lawyers at $70, and 10% Chief Executives at $93). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2019, published March 31, 2020, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined
using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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These reports contain no questions of a sensitive nature, as defined by OMB guidelines.
Estimate of Cost to the Federal Reserve System
The estimated proposed cost to the Federal Reserve System for collecting and processing
the FR 2028 is $311,960 per year, a decrease of $2,820 from the current cost of $312,920. The
estimated one-time cost to revise the report is $17,500.

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