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Date Amount
Apr. 5, 1985 $22,600
Sept. 21, 1985 44,975
Mar. 25, 1986 22,600
Oct. 21, 1986 44,975
Production Credit Association
Production Credit Association (PCA) is a lending institution
that makes loans to farmers and ranchers. Petitioners began
borrowing from PCA in about 1979 and borrowed throughout the
years in issue. Generally, the activity on the PCA loans was
seasonal; petitioners received disbursements from PCA beginning
in the late summer through fall and early winter and made
payments in the spring of the year. The PCA loans had maturity
dates of 1 year or less, but any unpaid balance at the maturity
date would be renewed with a new maturity date. Disbursements of
PCA loans to petitioners during the specified years totaled:
Year Amount
1985 $505,000
1986 260,000
1987 203,700
Petitioners made payments on the PCA loans during these same
years by checks drawn on the nursery bank account.
Prior to petitioners' receiving the SBA loans, PCA held as
collateral the equipment and nursery stock inventory and some
real estate. The SBA took a blanket lien with first priority on
petitioners' assets, moving PCA to a secondary position.
Thereafter, petitioners used the CD’s that were funded with the
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