Main Street Monday — Should the USDA B&I Loan Program Convert to Zero Subsidy?

July 9, 2018

By Bob Coleman
Editor, Main Street Monday

Main Street Monday — Should the USDA B&I Loan Program Convert to Zero Subsidy?

While the Farm Bill has passed the House and the Senate, details need to be worked out in a conference committee before it is sent to the President for his signature.

The big news is USDA’s community facilities program is slated for zero subsidy — all loan losses will be covered by borrower and lender fees. The USDA cf program funds infrastructure projects in rural America such as fire stations and hospitals. Also proposed to go zero subsidy is USDA’s REAP, the rural renewable energy loan program.

Of course, SBA 7(a) and SBA 504 loan programs continue along at zero subsidy, a key reason to SBA 7(a)’s rocketing loan volume growth.

The USDA business & industry loan program has hovered around $1 billion since the end of the Great Recession. Many support a zero subsidy saying it will free up more capital to rural America’s Main Street, while opposition is concerned borrower and lender fees will make the program unattractive to both.

Of course the devil is in the details which will need to be hashed out, but what do you generally think? We’ll post our results for the industry and Washington.

Should the USDA business & industry loan program become zero subsidy in the new Farm Bill?

• Yes
• No
• No Opinion

If yes, how should the program achieve zero subsidy? (Check all that apply)

• Secondary market “tax” similar to SBA 7(a)
• Additional levy on lender servicing fees
• Increased borrower guaranty fees
• Require “smaller” loans, which historically carry higher losses, to be processed SBA 7(a) or 504
• Other

Comments?