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To Entice More Rural Investment, USDA Proposes Changes To Loan Programs

USDA says the change will encourage private investment in rural communities.

The United States Department of Agriculture is seeking public comment on changes that it says will make getting loans for major projects easier for rural communities.

Four loan guarantee programs reassure banks that they’ll be repaid when towns borrow for infrastructure improvements such as water and wastewater treatment systems and energy projects. But each program has its own application and specific requirements.

The proposed changes (PDF) would streamline the process and reduce bureaucratic red-tape, according to a USDA statement, which could make the programs more appealing to larger banks and lead to greater private investment in rural communities.

Johnathan Hladik, policy director at the Center for Rural Affairs in Lyons, Nebraska, says the change has potential. For starters, it might make more money for the banks. 

“There is every reason to think that this was something that was developed with banks in mind,” he said. “It’s going to be important for us to read that fine print and to make sure it’s a positive for this community.”

It might alleviate some of the complexity of applying for a loan guarantee, he says, which might make the process less intimidating to some applicants and even possibly cheaper for some communities that would have hired an outside consultant to help navigate the programs. 

He urges community leaders who are considering applying for any of the loan guarantee programs to read the proposal and participate in the public comment period, which runs through mid-September.

“Take a look at what these regulations look like and what those restrictions look like,” he said, “because this cannot be something that is good for banks only, it’s got to be good for the community.”

The rule is slated to take effect October 1st. 

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