Legal Definitions - Federal Home Loan Bank

Federal Home Loan Bank

The Federal Home Loan Bank is one of 12 banks established by the federal government in 1932. Its purpose is to provide secured loans, known as advances, to member savings institutions and community financial institutions that support small businesses, small farms, and small agribusinesses. The Federal Housing Finance Board supervises these banks. The abbreviation for Federal Home Loan Bank is FHLB, and it is sometimes referred to as home loan bank.

Example 1: A small community bank in a rural area needs funds to lend to local farmers. They can apply for an advance from the Federal Home Loan Bank to support their lending activities.

Example 2: A credit union that is a member of the Federal Home Loan Bank needs to finance a small business loan. They can use an advance from the bank to provide the necessary funds.

These examples illustrate how the Federal Home Loan Bank provides support to member institutions that serve small businesses, small farms, and small agribusinesses. By providing secured loans, the bank helps these institutions to provide financing to their customers, which in turn supports economic growth and development in local communities.