Bill offering tax relief in rural lending gains support


The Enhancing Credit Opportunities in Rural America (ECORA) Act is showing promise as a farmer-friendly measure, and it’s gaining a lot of support from lending and other financial organizations.

For example, the Independent Community Bankers of America expressed strong support in a news release for the Senate introduction of the ECORA Act (S. 2202/H.R. 1977), which would exempt from taxation interest income on farm real estate and rural mortgage loans, allowing community banks to lower loan rates and more efficiently serve these borrowers.

Sen. Jerry Moran (R-Kan.) introduced the bill in the Senate following House introduction earlier this year by Reps. Ron Kind (D-Wis.) and Randy Feenstra (R-Iowa).

“This important legislation will help sustain and revive rural economies affected by the COVID-19 pandemic while providing community bank lenders with benefits they can pass on to customers, similar to other rural credit providers,” said ICBA President and CEO Rebeca Romero Rainey.

With rural America and the agricultural sector facing continued challenges, ECORA will:

  • Exempt from taxation loans secured by agricultural real estate.
  • Provide similar relief to interest on loans secured by rural single-family homes that are the borrower’s principal residence in towns with populations under 2,500.
  • Assist those seeking to remain on the farm or acquire a home loan in rural communities by providing borrowers with better rates and loan terms.
  • Offer community banks greater flexibility to work with farmers who may have trouble servicing their debt.
  • Give lenders a strong incentive to remain in the rural farming and housing markets, thereby boosting local economic activity.

The American Bankers Association also backs the measure, stating, “By removing this taxation, the cost to make farm and ranch real estate loans will be reduced, and the savings will be passed on to farm and ranch customers. It is estimated that ECORA could reduce the average interest rate on a farm and ranch real estate loan by 21 percent. ECORA offers a simple solution to help farmers and ranchers during this time of lower farm incomes without creating new government payments or programs.”


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