Saturday, May 10, 2008

Farm Credit Banks making permanent their experimental loans for community facilities

Lending institutions in the Farm Credit System, the major source of loans for farmers in the U.S., have been experimenting with financing community facilities in agricultural areas. The pilot program would become permanent under a rule proposed yesterday by directors of the Farm Credit Administration.

The idea behind such loans is that "Economic growth in rural areas is seen as crucial to attracting young adults and their families into and back into farming," writes Julie Harker of Brownfield Network. FCA Chairman and CEO Nancy Pellett told Brownfield in an interview that young farm families need "a second job for a spouse ... good schools, good medical services, recreational opportunities, etc. And these are the types of things that we need to bring those young people back to the community." (Read more)

The plan would allow loans for "essential community facilities, basic transportation infrastructure," disaster recovery, rural-development projects sponsored or guaranteed by government, and "venture capital funds that invest in rural businesses that create jobs and economic growth under certain conditions," FCA said in a press release. The agency said it has approved such loans "on a case-by-case basis to initiate pilot programs" since 2005, and 37 lending institutions in the system "have made investments through these pilot programs."

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