A recently unveiled House bill would speed approval times for U.S. Department of Agriculture loans to enhance credit access in rural communities.
Under the proposed express loan guarantee program, borrowers would receive a response from the agency within 36 hours of submitting an application. The proposal would cover loans of up to $1 million, including up to 75 percent for loans of up to $750,000 and 50 percent for loans of between $750,000 to $1 million.
The bill was introduced Oct. 3 by Reps. Brad Finstad (R-Minn.) and Angie Craig (D-Minn.). “These loans are essential for ag producers, especially young and beginning farmers who rely on access to capital to finance their operation,” Finstad said. “However, many farmers who depend on access to capital to feed and fuel the world receive loan approvals from their local lenders, only to wait months for approval from USDA.”
Gus Barker, CEO of Newell, Iowa-based First Community Bank, supported the legislation earlier this year while testifying before the Senate Agriculture Committee. The loan guarantees would function similarly to a Small Business Administration program that provides a 50 percent guarantee for a $500,000 loan.
“Lenders would make credit decisions while ensuring careful due diligence by having more skin in the game,” said Barker, who chairs the Independent Community Bankers of America’s Agriculture and Rural Committee. “This improves access to credit for family farmers and ranchers in a timely fashion.”
Both the ICBA and BankIn Minnesota support the bill. The ICBA has advocated for the proposal to be included in this year’s Farm Bill. “This bill will allow community banks in Minnesota to continue their strong support of Minnesota’s farmers by improving access to credit through more timely credit approvals,” said BankIn Minnesota President & CEO Jim Amundson. “We applaud this positive, bipartisan effort to address this important issue.”