ICBA Recommendations on the Farm Credit and Rural Development Titles
Summary of ICBA Recommendations
Credit & Rural Development Titles
Farm Credit Title
Authorization of Funding for FSA Loans
- ICBA prefers Section 512 of the House bill which authorizes funding for the FSA guaranteed and direct loan program at "such sums as may be necessary" over Section 529 of the Senate bill which authorizes specific funding limits for each fiscal year.
- If appropriated levels are limited, then a permanent mechanism to quickly provide emergency funds should be incorporated to ensure adequate monies are available to farmers if appropriated funds become depleted.
Easing the Limit on Eligibility
- ICBA prefers Section 502 of the House bill that suspends the 15 year limitation period for which borrowers are eligible for guaranteed assistance until December 31, 2006; or alternatively, the conferees should consider suspending the current 15-year limit on eligibility through the life of the farm bill.
Local Flexibility If Centralized Administration of FSA Lender Programs
- ICBA recommends that language direct USDA, in any move towards centralized offices, to also provide lenders with the choice to work with local FSA offices.
FSA Low-Doc Loan Program
- ICBA prefers Section 504 of the House bill that increases low-doc loans to $150,000.
Reauthorizing the Interest Rate Reduction Program
- ICBA prefers Section 514 of the House bill that reauthorizes the interest rate reduction program through 2011 over Section 530 of the Senate bill that makes the interest rate reduction program permanent.
Aggie Bond Program
- ICBA supports Section 506 of the Senate bill which allows the Secretary to guarantee a loan made under a State beginning farmer or rancher program.
Down Payment Loan Program
- ICBA prefers Section 507 of the Senate bill.
- ICBA supports Section 502 of the Senate bill that authorizes the Secretary to use FSA loan program funds to refinance short-term, temporary "bridge loans".
Farmer Mac Board of Directors
- ICBA recommends the provision to significantly expand Farmer Mac's board be deleted.
Rural Development Title & Issues
Low-Doc B&I Loan Program
- ICBA supports Section 638 of the Senate bill that increases the current B&I low-doc loan guarantee program from $50,000 up to $400,000 during fiscal years 2002 and 2003 and up to $600,000 thereafter if approved by the Secretary.
Fees for B&I Loan Program
- ICBA recommends that fees be limited to one-percent on loans of less than $500,000 and that lenders be allowed to amortize the cost of fees over the life of the loan.
Preventing Rural Dollars From Going to Non-Rural Areas
- ICBA recommends using B&I loan guarantee funds only in rural areas. Thus ICBA prefers Section 635 of the Senate bill that limits any B&I guaranteed loan funds received by a farmer-owned cooperative headquartered in a metropolitan (non-rural) area to only being used for projects located in rural areas. However, because money is fungible, ICBA also recommends requiring the Secretary to more closely monitor use of these funds to ensure they are actually spent in rural areas.
B&I Loan Limit Size
- ICBA opposes Section 612 of the House bill which increases the B&I loan limit from the current $25 million level to $100 million and urges that it be stricken.
Disallow Counting of Intangible Assets
- ICBA recommends deleting Section 619 of the House bill which requires intangible assets and subordinated unsecured debt to be considered as collateral in determining eligibility for B&I loan guarantees.
Rural Equity Fund
- ICBA supports Section 601 of the Senate bill that authorizes the creation of a National Rural Cooperative and Business Equity Fund.
Rural Business Investment Companies (RBICs)
- ICBA recommends: 1) smaller RBICs be allowed to leverage their capital under certain conditions; 2) operational assistance grants focus primarily on technical assistance and not be used in a manner that drives out of business other competitors who are not grant recipients; 3) final language that ensures access to information that is non-proprietary, and non-trade secret in nature when necessary to determine whether an individual RBIC has acted in a manner consistent with the law.