Legal Definitions - home loan bank

A Home Loan Bank, also known as a Federal Home Loan Bank (FHLB), is one of 12 banks established by the federal government in 1932. The purpose of these banks is to provide secured loans, or 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, which are abbreviated as FHLBs. They are an important source of funding for local financial institutions, helping them to provide loans to individuals and businesses in their communities.

Let's say a small business owner needs a loan to purchase new equipment. They approach their local community bank, but the bank doesn't have enough funds to provide the loan. The bank can then turn to their FHLB for a secured loan, which they can then use to provide the loan to the small business owner.

Another example could be a small farmer who needs a loan to purchase new land. Their local savings institution may not have enough funds to provide the loan, so they can turn to their FHLB for a secured loan, which they can then use to provide the loan to the farmer.

These examples illustrate how FHLBs provide important funding to local financial institutions, which in turn helps support small businesses, small farms, and small agribusinesses in their communities.