NCUA expands credit union lending to aid drought-affected farmers

August 9, 2012 at 3:37 pm

President Obama is putting the pressure on Congress to act on the Farm Bill during this recess. In a statement this past Tuesday, the President called the Farm Bill “the single-best way that we can help rural communities … in the short-term, but also in the long-term.”

He also announced some new initiatives to help farmers suffering from the drought that has hit the Midwest.  1,500 counties in 32 states have been designated disaster areas.  The new initiatives include $30 million from the USDA to get farmers water for their livestock and land, aid from the Department of Transportation for commercial truckers providing supplies to farmer and ranchers, and help from the Small Business Administration to connect farmers with low-interest emergency loans, counseling, and workforce programs.

In addition to these initiatives, the National Credit Union Administration (NCUA) will expand credit unions’ small business lending capacity. This is related to the NCUA’s initiative to streamline the process for credit unions to be designated as low-income credit unions, which allows these credit unions to make unlimited member business loans.Credit unions without the low-income designation are limited to a cap on member business loans up to 12.25 percent of assets.  The new process proactively alerts credit unions of the eligibility and allows them to opt-in, rather than having the credit unions apply and fill out paperwork.

The NCUA estimates that over $250 million could be made available for lending through this initiative. Also, 470 federal credit unions are headquartered in the drought-stricken states.

While all of these initiatives would help farmers in the immediate term, a new Farm Bill is necessary for the long-term. Farmers, the agriculture industry, and the nation as whole need to have reforms and policies that will provide guidance and a level of certainty in the years to come.

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Entry filed under: Agriculture Policy, Credit Unions, Farm Lending, Farm Policy. Tags: , , .

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