The Independent Community Bankers of America (ICBA) Wednesday said it strongly supports legislation that would exempt from taxation interest income on farm real estate and rural mortgages.
If passed, the Enhancing Credit Opportunities in Rural America Act (ECORA) would allow community banks to lower loan rates and better serve rural and farming borrowers.
“With community banks making 80 percent of banking industry agricultural loans, ICBA strongly supports the Enhancing Credit Opportunities in Rural America Act (ECORA) to help them offer lower rates to certain rural borrowers and homeowners,” ICBA President and CEO Rebeca Romero Rainey said. “This important legislation will help sustain and revive rural economies struggling to overcome the impact of the COVID-19 pandemic while providing community bank lenders with benefits they can pass on to customers, similar to other rural credit providers.”
Re-introduced by U.S. Reps. Ron Kind (D-Wis.) and Randy Feenstra (R-Iowa) on March 17, the act was originally introduced in 2019 and re-introduced again in 2020.
“I’ve heard from many Wisconsin lenders and farmers about a credit crunch for agricultural and rural loans, which has only worsened as the COVID-19 crisis continues,” Kind said. “The ECORA Act will take steps to address this issue, lowering the cost for farmers and families to acquire credit in our rural communities and providing a pathway to increased income. Especially during these challenging times, we need to ensure our hardworking family farmers get the support they need and increasing their access to low-cost credit is an important way to do so.”
ICBA said the act would exempt from taxation loans secured by agricultural real estate and provide similar relief to interest on loans secured by rural single-family homes. Those actions would help those looking to get loans to remain on their farms or acquire a home loan in rural communities get better rates and loan terms while giving banks a strong incentive to remain in the rural farming and housing markets.
“The Enhancing Credit Opportunities in Rural America Act is an important proposal that will help provide lower-cost loans to farmers and ranchers. Our hardworking farmers feed and fuel the world, and I will support any effort that provides the resources they need to succeed in today’s economy,” Feenstra said.