Rural Development: Rural Business-Cooperative Service Business Loan Losses Page: 17 of 29
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Loans, Loan Losses, and Loan File
Documentation for 24 Guaranteed Business
and Industry Loans
Loss study plan
The lender supported the project but stated
that its evaluation of the project was limited.
A feasibility study was not prepared. The
business had operating problems, was
cash-starved, and sold fish at a discount
before they reached full size, leading to
failure. Fish kills also occurred.
A feasibility study of this new aircraft
business was needed. After obtaining the
loan, the owners decided to change their
plans and increase the capacity of the
proven airplane they had planned to
produce, which had been certified by the
Federal Aviation Administration. The changes
to this crop duster required recertification,
which slowed the start-up of production.
Also, there were management and inventory
A new co-op proposed to start the first
large-scale carrot production in North
Dakota. A feasibility study was not obtained,
and the business plan was not prepared by
the company. The manager had only 1 year
of experience in carrot research and no
business management experience. The
growers did not meet their production
commitments, and the co-op members did
not have a written cooperative agreement.
A feasibility study of this new manufacturing
business was needed. Management was not
skilled in this business or in manufacturing.
The company did not achieve the production
levels needed to succeed. There were quality
control problems, poor control of expenses
and production materials, and accounting
GAO/RCED-99-249 Rural Business and Industry Loans
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United States. General Accounting Office. Rural Development: Rural Business-Cooperative Service Business Loan Losses, report, August 25, 1999; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc290922/m1/17/: accessed May 20, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.