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ACRE Act would reduce cost of borrowing for farmers
The American Bankers Association is bringing attention to legislation that would lower the cost of borrowing for farmers.
Senior vice president of agriculture and rural banking policy Ed Elfmann says the Access for our Rural Economy, or ACRE Act, removes the taxation on income earned from interest on farm real estate loans.
“In essence, what it means is that it lowers the cost to put together a loan. Because when a bank puts together a loan, there’s two costs. There’s risk and there’s the cost of doing business, part of which is paying taxes.”
He tells Brownfield removing the taxation level would lower interest rates on farm real estate loans, rural home mortgages, and aquaculture.
“When you take something like the ACRE Act to remove the taxation side of it, you’re going to lower interest rates 50 to 150 basis points. That’s your biggest barrier, right, to getting into buying land, is obviously the cost. And your interest rates over time are going to add up on your 10, 20, 30-year notes.”
Elfmann says the ACRE Act has bipartisan support in the U.S. House and Senate and the timing is right because the farm economy is facing some headwinds.
Another handout to farmers to replace sound financial decision making. The bank has to pay taxes on the interest earned on real estate loans made to non-farmers (i.e. home mortgages). Why should a real estate loan to a farmer be any different?
Farmers receive enough government subsidy via reduced crop insurance rates, etc. It is time for farmers to learn how to run a business and participate in the ag industry without relying on tax payers to fund their lifestyles.