What is a patronage refund?
A patronage refund is a way the Board of Directors can distribute a portion of the cooperative's net income to its borrowers. This patronage refund is distributed to members based on the proportion of net interest earned on their loans to the total net interest earned by the cooperative. Farm Credit Southeast Missouri has declared a cash patronage refund every year since 1994.
How do patronage refunds benefit Farm Credit borrowers?
In addition to the already competitive rates of Farm Credit Southeast Missouri's loan products, patronage refunds benefit borrowers by effectively reducing their cost of borrowing even more.
The patronage refund program sets Farm Credit Southeast Missouri apart from other ag lenders by returning profits to ALL of its borrowers, not just a small select group of stockholders.
The more business you do with Farm Credit, the larger your potential refund.
How can I maximize the potential value of my patronage refund?
Our patronage refunds are designed to reward you based on the volume of borrowing you do with us. So the more business you do with Farm Credit Southeast Missouri, the larger your potential refund.
How do patronage refunds benefit Farm Credit Southeast Missouri?
Patronage refunds can help Farm Credit reduce its tax expense and maintain a strong capital position. Unlike other corporations, where profits are taxed twice - when earned by the corporation and when distributed to owners as dividends - a cooperative's profits are taxed only once when they are distributed as a patronage refund. Farm Credit is allowed a tax deduction for net income that is distributed in the form of a patronage refund.
How is a patronage refund issued?
Patronage refunds are issued by check the January following the year in which it was declared by the Board of Directors. Each time a patronage refund is issued, eligible members will be notified of their patronage refund.
Also, in January, Farm Credit will send each member an IRS Form 1099-PATR for the taxable patronage refunds issued during the previous year.