Congress is considering legislation to include the cancellation of loans for businesses and rural communities under the Rural Equal Aid Act, a bipartisan measure sponsored by U.S. Representative Cindy Axne, D-Iowa. It will provide necessary assistance to entities receiving loans under the United States Department of Agriculture’s Rural Development Program.
Currently, only businesses that have taken out loans through the Small Business Administration are eligible for cancellation of principal, interest, and all associated charges owed on covered loans for a period of six months. . This was included in the Coronavirus Aid, Relief and Economic Security Act, known as the CARES Act. Axne said this excluded rural businesses.
Under the new proposal, the payment relief would extend to businesses receiving loans under the Rural Microentrepreneur Support Program and the Intermediate Lending Program, as well as to loans to public and non-profit organizations. nonprofit for community amenities; and to expanding rural businesses, cooperatives and nonprofit organizations.
Johnathan Hladik, policy director at the Center for Rural Affairs, said passing the REA law is crucial not only for the businesses and community entities involved, but also for rural America at large.
“Expanding support for rural businesses will ensure parity for rural communities that have been hit hard by the economic impacts of the coronavirus pandemic,” Hladik said. “It’s the loans that keep Main Street vibrant, allowing small community financial institutions to build local economies with local dollars.”
Under REA, USDA would be required to issue loans similar to the SBA’s PPP program. These loans go through small community financial institutions and help local governments, tribes, educational institutions and small businesses grow local economies with local dollars.
The sponsors say that providing these small businesses and community organizations with the same support as that given to SBA borrowers is essential to ensure their future survival – and the health of rural communities.
The REA Act extends grants to the following USDA RD loan programs:
- Community facilities: These loans are made to public and non-profit organizations for essential community facilities such as hospitals, libraries, daycares and community centers, as well as public facilities such as fire stations or town halls .
- Business and Industry: These loans are given to businesses, cooperatives and non-profit organizations to develop and develop businesses in rural areas.
- Intermediate loan program: these are loans of up to $ 250,000 made through small local intermediaries to borrowers who cannot obtain credit elsewhere, but who need capital to start up or develop. their business. These loans are on average less than $ 100,000 and support small local businesses.
- Rural micro-entrepreneurs assistance program: these are loans of up to $ 50,000 granted through local non-profit organizations. These loans are available to businesses with no more than 10 employees, making them a frequent choice for entrepreneurs looking for capital to start a new business. In addition, RMAP loans are frequently used by women entrepreneurs.
“Our rural businesses have suffered the same burdens and weathered the same storm since the onset of COVID-19,” Axne said. “It is only right that we extend the same provisions to them to support them during difficult economic times. I am proud to lead this bipartisan group to unveil this legislation in both houses of Congress this week, and I urge congressional leaders to include this common sense measure in discussions of the next round of essential COVID-19 aid. . ”
The co-sponsors of the bill include:
- Representative Lisa Blunt Rochester, D-Delaware
- Representative Jared Golden, D-Maine
- Representative Troy Balderson, R-Ohio
- Representative Austin Scott, R-Georgia
- Representative Scott Tipton, R-Colorado
Senator Jon Tester, D-Montana, introduced the bill to the Senate along with Independent Senator from Maine Angus King, Republican Senator from Utah Mitt Romney, Democratic Senator from New Hampshire Jeanne Shaheen, Democratic Senator from Delaware Chris Coons and the Republican of Georgia. Senator David Perdue.
“When Congress passed the CARES Act, we included provisions to reduce the loan burden on small businesses across the country,” King said. “It was the right decision, but by excluding USDA rural development loans from the program, the effort left out many rural businesses who are feeling the same pain. Now, as Congress contemplates the next coronavirus relief program, we should extend these protections to ensure our rural communities can access the same kind of support as the rest of the country. ”
“We have borrowers in rural Maine communities for whom the Rural Equal Aid Act will be a boon,” said Laura Buxbaum, senior vice president for policy and resource development at Coastal Enterprises Inc. “We know that they are struggling and will redirect their payments to cover lost income and new opportunities that can help their businesses survive.