Pursuant to a congressional request, GAO provided information on the: (1) number and dollar value of business assistance loans approved by the Department of Agriculture's Rural Business-Cooperative Service (RBS); (2) federal government's costs associated with the agency's loans; and (3) financial condition of the agency's loan portfolio, including the losses incurred.

GAO noted that: (1) RBS approved more than 2,900 rural business loans during fiscal year (FY) 1993 through the first 6 months of FY 1998; (2) these loans totalled about $3.2 billion; (3) more than three quarters of these loans and almost 90 percent of the total loan amount were guaranteed business and industry loans; (4) only 2 percent of the loans were direct government-funded business and industry loans; (5) the remaining loans were direct loans under the intermediary relending program and the rural economic development program; (6) the estimated total cost of these loan programs was about $290 million during FY 1993 through FY 1997; (7) of this amount, the subsidy costs of the loans, which primarily involve the estimates of default costs and interest rate subsidies, were almost $195 million; (8) administrative costs, which cover estimates of salaries and other expenses associated with operating the programs, totalled about $95 million; (9) as of March 31, 1998, the unpaid principal on the RBS's outstanding guaranteed and direct loans totalled about $2.2 billion; (10) delinquent borrowers held about $116 million--$112 million on guaranteed business and industry loans and about $4 million on direct business and industry loans and intermediary relending loans--or 5.4 percent of the total outstanding principal; (11) furthermore, from the start of FY 1993 through March 31, 1998, the agency incurred loan losses totalling about $266 million: about $264 million on guaranteed business and industry loans and about $2 million on intermediary relending loans; and (12) the agency did not experience any losses on debt associated with direct business and industry loans or with rural economic development loans.