Rep. Randy Feenstra (IA-04) partnered with Rep. Ron Kind (WI-03) to introduce the Enhancing Credit Opportunities in Rural America (ECORA) Act, which would remove taxation on income from farm real estate loans made by community banks. The ECORA Act will benefit farmers, families, and rural communities across Iowa by allowing more institutions to offer affordable credit to rural and agricultural borrowers.
“The Enhancing Credit Opportunities in Rural America Act is an important proposal that will help provide lower cost loans to farmers and ranchers. Our hardworking farmers feed and fuel the world, and I will support any effort that provides the resources they need to succeed in today’s economy,” said Rep. Feenstra.
“I’ve heard from many Wisconsin lenders and farmers about a credit crunch for agricultural and rural loans, which has only worsened as the COVID-19 crisis continues,” said Rep. Kind. “The ECORA Act will take steps to address this issue, lowering the cost for farmers and families to acquire credit in our rural communities and providing a pathway to increased income. Especially during these challenging times, we need to ensure our hardworking family farmers get the support they need, and increasing their access to low-cost credit is an important way to do so.”
The ECORA Act would amend the Internal Revenue Service (IRS) code to level the playing field for bankers that administer agricultural real estate loans by granting them tax exempt status on interest earned. This same exemption is already granted to farm credit institutions. Leveling the playing field will create competition, drive down interest rates, and help provide farmers with more affordable loan options.
Iowa, Wisconsin, Kansas, Maryland, Minnesota, Nebraska, New Hampshire, South Dakota, and West Virginia have all experienced a decade-high number of farm bankruptcies. The COVID-19 pandemic has only compounded this crisis, as farmers faced upended food supply chains and reduced access to critical markets over the past year. The ECORA Act will help provide support to agricultural producers during these challenging times — estimates show that the bill could reduce the average interest rate on a farm real estate loan by 1.5 to 2 percent.