The Independent Community Bankers of America (ICBA) shared its approval for legislation to support farmers, ranchers and rural homeowners by providing tax relief for agricultural and rural residential lending. The Enhancing Credit Opportunities in Rural America Act, introduced by Rep. Lynn Jenkins (R-Kan.), would promote access to credit and reduce borrowing costs amid the current environment of weak commodities prices, according to the ICBA press release.
“ICBA strongly supports the Enhancing Credit Opportunities in Rural America Act to help community banks offer lower rates to certain rural borrowers and homeowners, which will help revive rural economies threatened by low commodities prices,” ICBA President and CEO Camden R. Fine said in the release. “This legislation will help farmers and rural communities remain viable during a challenging economic environment as community banks will receive greater flexibility to serve producers and the rural housing market.
“The legislation will also allow community banks to provide lower loan rates so they operate on a more level playing field and can compete with other rural lenders that already utilize these benefits,” Fine added.
Although farmers enjoyed robust prices for their commodities earlier this decade, the current sag in farm prices has reduced industry profits from $123 billion in 2013 to a projected $62.3 billion this year. Meanwhile, strict mortgage and appraisal regulations are driving lenders out of rural mortgage lending, curtailing access to credit, and threatening the rural housing market, the release stated.
Under Jenkins’ bill, the interest received on farm loans secured by agricultural real estate would not be taxable. The bill would provide similar relief to interest on loans secured by rural single-family homes that are the principal residence of the borrower in towns with a population of less than 2,500.
Together, these provisions will offer community bankers greater flexibility to work with farmers who may have trouble servicing their debt while giving lenders a strong incentive to remain in the rural farming and housing markets, ICBA said.