Farm Loans

The current budget for farm loans is approximately $6.58 billion, yet only 18,939 loans have been issued nationally. It’s staggering to consider that such significant funding exists to support farmers, yet so many struggle to access these critical resources.

Barriers to Access:

One of the primary obstacles embedded in the farm bill is a clause requiring proof of "managerial ability." While intended to ensure responsible lending, this clause can unfairly exclude hardworking farmers and ranchers who may lack formal managerial credentials but possess the practical expertise needed to run their operations. Removing this requirement would vastly increase loan eligibility and allow more farmers to access the funding they need to succeed.

Additionally, the requirement for applicants to prove they have "sufficient credit elsewhere" often disqualifies farmers who could otherwise benefit from the favorable loan rates offered, which range from 1.5% to 5%. This provision effectively locks out many smaller operations and family-owned farms that need competitive financing to grow or recover from financial setbacks.

To make farm loans more accessible and equitable, I propose the following reforms:

Remove the "Managerial Ability" Clause: Shift the focus to the farmer’s practical experience and history of operation rather than formal managerial qualifications.

Eliminate the "Sufficient Credit Elsewhere" Requirement: Allow farmers and ranchers to access favorable loan rates, regardless of whether they have other credit options. This change would especially benefit small farms and operations that are underserved by traditional financial institutions.

Streamline the Application Process: Simplify the loan application process to make it more transparent and accessible, especially for first-time applicants.

By making farm loans more accessible, we can empower farmers and ranchers to invest in their operations, weather economic challenges, and build stronger, more sustainable businesses. Removing unnecessary barriers to funding helps ensure that the financial resources intended for farmers are actually used by those who need them, fostering resilience and growth in rural America.