The regulatory path for agricultural lenders is much easier than just a few months ago was the message from ABA leadership and policy experts during the first day of the association’s annual Agricultural Bankers Conference.
“What a difference a year makes,” ABA President and CEO Rob Nichols told the audience gathered in St. Louis, Missouri. Nichols noted that in the last 10 months, many “misguided” banking regulations have been repealed and said the trend would continue. “Regulatory rightsizing is well underway,” he said. “It will be a lot easier to operate a bank over the next three or four years than that has been over the past three or four.” He stressed, however, that while the regulatory outlook has improved and the industry may be “more on offense than defense,” there’s “plenty of work left to do.”
Members of ABA’s policy team updated the ag audience on recent regulatory “wins” as well as on advocacy areas contributing to the ongoing work Nichols referenced.
Without a doubt, the biggest win over the last few months for ag lenders was ACRE — the Access to Credit for our Rural Economy Act. Decades in the making, ACRE was enacted as part of this summer’s One Big Beautiful Bill Act and permits banks to exclude from gross income 25% of interest income derived from certain qualified real estate loans without a sunset date. This lowers the cost of credit and makes credit more widely available for farmers and ranchers.
According to Ed Elfmann, ABA’s SVP of agricultural and rural banking, ACRE is most certainly a win for ag lenders and rural communities, but it also falls into the “work to be done” category. Though there remains significant relief for rural and agricultural communities, the version included in the OBBBA was modified from ABA’s original ACRE proposal.
“We’re not done with ACRE by any means,” Elfmann said. “This is just the beginning. We’ve proved that if [bankers] engage at a grassroots level, if you’re willing to talk to your members of Congress and willing to push your issues, things can happen that are positive for our industry and, ultimately, positive for our farmers and ranchers.”
Elfmann noted that there are many options left to improve ACRE in the future, including through revised tax legislation. “Now we can have the discussions about how to get it perfect. We’re good now, but we want to get to perfect. How do we get there?” Elfmann said.
“This is brand new policy,” he reminded the audience. “It’s never existed before in the history of the United States. And because of that, there’s going to be a lot of bumps in the road as we figure this thing out.”
ABA is working with members of Congress to better understand their intent with the law, as well as talking with tax experts to ensure a smooth and consistent implementation of the law’s requirements and to better understand the Internal Revenue Service’s approach to auditing them.
A new, updated Farm Bill is another priority for agricultural lenders, farmers and ranchers across the country. Traditionally, a new Farm Bill is passed every five years to govern agricultural and nutrition programs, including areas such as farm commodity support, crop insurance, nutrition assistance, conservation, farm risk management, food security and rural development. Congress last passed a full five-year Farm Bill in 2018, which expired in 2023. Since then, Congress has approved two consecutive 12-month extensions (the most recent expired in September).
The passage of a “robust” five-year Farm Bill is a priority for ABA, said Blake Earley, ABA’s SVP of congressional relations. Among ABA’s priorities for the Farm Bill, according to Earley, are “meaningful increases” to the guaranteed loan limits at the Farm Service Agency. ABA is advocating for Congress to increase FSA guaranteed loan limits to at least $2.5 million for operating loans and at least $3.5 million for farm ownership loans (current levels are capped at $1.75 million for both types of loans). In addition, Earley said ABA is making the case to increase the dollar limits of FSA’s down payment assistance, which helps beginning farmers, ranchers and underserved farmers in accessing capital for farmland. ABA also is advocating for increased funding for FSA’s technology programs. Rural development programs also should benefit from an updated Farm Bill, Earley said.
In addition, Earley addressed ABA’s continued advocacy efforts to reform or repeal Section 1071 of the Dodd-Frank Act, which requires financial institutions to report data on small-business lending. The Consumer Financial Protection Bureau released a final rule in 2023 to implement Section 1071. Several lawsuits followed, including one brought by the Texas Bankers Association and ABA, which resulted in a stay of the mandatory compliance dates for members of the associations pending the outcome of the case.
As the ag conference kicked off, CFPB proposed scaling back the scope of data collection, saying that adopting a “longer-term” approach that allows for the future addition of more data points would be the best way to enforce the regulation. For the ag sector, this latest move would exclude Farm Credit System lenders from coverage and raise the origination threshold for which institutions are covered from 100 to 1,000 credit transactions for each of two consecutive years.
