Bill to spark rural ag lending introduced in the House

A bipartisan bill introduced last week in the House of Representatives is intended to spark agricultural real estate lending growth by granting community banks tax-exempt status for earned interest. 

Introduced by Reps. Randy Feenstra (R-Iowa) and Wiley Nickel (D-N.C.), the Access to Credit for our Rural Economy Act of 2023 the tax exemption would also apply to single-family home mortgage loans in rural communities with fewer than 2,500 residents and for mortgages of less than $750,000. According to the American Bankers Association, the bill would result in approximately $1.4 billion in annual interest expense savings for farmers and ranchers this year, including $950 million in interest expense savings for loans secured by farmland and $450 million for rural mortgages.

Feenstra, who noted that Farm Credit institutions already exempted from taxes on ag real estate loans, said the bill is needed as interest rate hikes and continued high inflation have increased operating costs for farmers, preventing them from entering the industry and keeping rural families from securing home mortgages. 

“We need to give our main street lenders much-needed flexibility to offer agricultural and home loans at affordable rates to grow our rural communities,” Feenstra added. 

Both the ABA and Independent Community Bankers of America support the bill. “ACRE will help borrowers struggling with higher interest rates, especially our young, beginning and small farmers and ranchers and consumers in our small rural communities seeking to buy or refinance homes,” said Rebeca Romero Rainey, president and CEO of the ICBA. “Banks will be able to extend benefits to their customers that are already available to other credit providers.”