The Independent Community Bankers of America (ICBA) has endorsed a bill introduced in Congress that seeks to expand credit opportunities for farmers and others in rural America.
The Enhancing Credit Opportunities in Rural America Act (S. 2202/H.R. 1977) would exempt from taxation interest income on farm real estate and rural mortgage loans. This, in turn, would allow community banks to lower loan rates and better serve these borrowers. The bill was introduced by U.S. Sen. Jerry Moran (R-KS) in the Senate and U.S. Reps. Ron Kind (D-WI) and Randy Feenstra (R-IA) in the House.
“With community banks making 80 percent of banking industry agricultural loans, ICBA strongly supports the Enhancing Credit Opportunities in Rural America Act to help them offer lower rates in rural communities,” ICBA President and CEO Rebeca Romero Rainey said. “This important legislation will help sustain and revive rural economies affected by the COVID-19 pandemic while providing community bank lenders with benefits they can pass on to customers, similar to other rural credit providers.”
Specifically, the legislation would exempt from taxation loans secured by agricultural real estate; provide similar relief to interest on loans secured by rural single-family homes that are the borrower’s principal residence in towns with populations under 2,500; and assist those seeking to remain on the farm or acquire a home loan in rural communities by providing borrowers with better rates and loan terms.
In addition, it would offer community banks greater flexibility to work with farmers who may have trouble servicing their debt and give lenders an incentive to remain in the rural farming and housing markets.