Ag Lender Plows Under Paperwork
Omaha World Herald Business Section Published Sunday, March 14, 2004
BY VIRGIL LARSON
WORLD-HERALD STAFF WRITER

Over the next six months, a Glenwood, Iowa, company will train 2,200 federal employees to use the firm's software to process farm-loan applications.

About 100 Farm Service Agency employees a week will come to Omaha to be trained, beginning next month.

A smaller group of agency employees went through the training program and fine-tuned it last week. Those people will take turns working with trainees in Omaha from April to September.

The software from Equity Consultants Inc., known as ECI, is the basis for an overhaul that will convert the paper-based, federal farm-loan program to an Internet-based one.

"Our Web Equity Manager® system tells them whether or not to make this loan," ECI owner Gary Kruse said.

"Eventually, farmers will be able to go online and apply for loans," said Steve Rubin, the Farm Service Agency's senior loan officer in Washington.

Rubin said the new system is the biggest administrative change in the program since the 1940s. It is part of the federal government's E-Gov effort to handle work electronically rather than on paper.

Completion of the farm-loan changeover is scheduled for 2005. Until then, many farmers will carry paperwork into agency offices and apply for loans. Farmers can fill out the forms on a Web site, but agency employees must retype the data.

The agency has about $18 billion in loans and 100,000 borrowers. It makes about 35,000 loans a year worth $3.5 billion, said Mike Hinton, the agency's direct-loan chief.

Rubin and Hinton were among those in Omaha last week for the training program's trial run.

Ninety-eight state Farm Service Agency chiefs and state online coordinators will train the week of April 5. The following week, 100 lower-level agency employees from Minnesota, Vermont and New Hampshire will come to Omaha. About 120 people from Texas will be the last group, training during the last week of September.

In between, employees from the other 46 states, Puerto Rico and American Samoa will be sitting down with government-issued laptop computers on temporary desks in a makeshift classroom on the otherwise vacant eighth floor of the south tower of Central Park Plaza.

Besides bringing the system online, the ECI software will alter the type of information that is gathered from applicants for farm real estate and operating loans and the way that information is analyzed. Both are outdated, Hinton said.

The Farm Service Agency began looking for software for the update in April 2002. It found only one company that fit its needs - ECI. "There's a lot of suppliers out there but nobody else online," Rubin said.

ECI's contract is for $4.8 million. Kruse said the contract will represent about 20 percent of his company's revenue the first year of the three-year contract and about 10 percent or less in successive years.

Kruse said the software that will overhaul the federal loan program is an off-the-shelf product he has been selling to farmers and farm lenders, including the Farm Credit Bank system.

The program is Web-based, but some larger banks have it on their own servers, Kruse said. ECI's servers are housed in First National Bank's First Technology Center in Omaha. ECI's 24 employees run their system from Glenwood.

ECI's software grades loan applications and advises the lender what terms should be put on a loan at a given grade.

Kruse, an ex-farmer, started the company in 1985 as a financial consulting firm for farmers. The move into computerized forms began with Lotus spreadsheets in 1986 and with Kruse having no computer experience.

"I had to have my brother send me a computer," Kruse said. "I had somebody in the office show me how to turn it on."

He began selling software programs to banks in 1991 and was surprised there was a market. "We thought they already had something," he said. "They didn't."

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