American Bankers Association Says ACRE Act Would Benefit Producers

The Access to Credit for Rural Economy Act known as the ACRE Act, is new policy that is being advocated for by the American Bankers Association and would provide more competition for agricultural lending as well as lower the cost for producers. American Bankers Association's Senior Vice President of agricultural and rural banking policy, Ed Elfmann gives more insight on what this means for producers.

"The ACRE Cct will lower interest rates for farmers and ranchers and rural homeowners, and that happened by removing the taxation on income earned from interest on those loans that exist. So if we remove the taxes that exist on the farm real estate and rural homeowner loan that will help bring down the interest rate, our analysis has those interest rates coming down 50 to 150 basis points on average."

Elfmann says tax policy is complicated, but this bill would allow for more freedom for community leaders.

"So by removing the tax burden that exists on these loans, community banks would be able to finally match the pricing of lenders that already benefit from this tax. Like I said, it's 5150 basis points. So if you're fixing a half percent interest, you'll be closer to five, and that's real money. If you're a farmer trying to put together a loan for next year and trying to figure out how you're going to make everything cash flow."

Ed Elfman with the American Bankers Association.