An Illinois farming-business partner of Agriculture Secretary John R. Block failed to meet the Jan. 1 repayment deadline on his controversial $400,000 Farmers Home Administration (FmHA) loan, but he is not technically in default, the Agriculture Department said yesterday.

Frank W. Naylor Jr., undersecretary for small community and rural development, said that under FmHA rules, John W. Curry of Galesburg, Ill., has the standard 15 days of grace to repay the low-interest loan before further action is taken.

The FmHA loan to Curry last year provoked widespread charges of political favoritism. Legislators and farmer groups complained that Curry, required only to offer his 1984 crop as collateral, received more lenient terms than other smaller borrowers.

Block insisted that he knew nothing about the loan and had no role in granting it.

And while Block argued that he would not benefit from Curry's loan, it allowed Curry to continue operations on 13 farms in three states and avert a failure that could have triggered foreclosure action by other lenders against Block-Curry operations.

The secretary, reacting to criticism of his business relationship with Curry, announced that he was putting properties he held jointly with his Illinois neighbor in a trust over which he would have no control.

Curry sent a strong signal last November that his fortunes had taken a sour turn when he filed suit in U.S. District Court in Illinois, asking that his 1984 crop income from 37 farming operations in Iowa and Missouri be distributed to a dozen creditors, including the FmHA.

Curry, asking the court to prohibit any of the creditors from foreclosing on him, said the petition was spurred by the threats of an Iowa bank and farm supplier to take such action unless his debts were paid promptly.

Curry said his estimated income of $1.6 million would not be enough to cover his 1984 planting and harvesting costs on the 37 farms.

He asked the court at Peoria to establish a priority for repaying the FmHA and 11 other creditor banks and suppliers.

The federal court has taken no action on the Curry petition. But Naylor said yesterday that "the U.S. attorney is working on the case and we will move to protect our position and we will do so aggressively."

"We will pursue our rights on the loan and seek collection on it," he said.

Meanwhile, Naylor said, Curry will not be termed delinquent on his loan unless he misses the Jan. 15 grace-period deadline.

Default -- the point at which the FmHA would begin foreclosure action -- could not be declared until further legal requirements are met.