S4093DEC8

S.4093 A bill to amend the Farm Security and Rural Investment Act of 2002 to extend a suspension of limitation on the period for which certain borrowers are eligible for guaranteed assistance.

The bill suspends the limitation on how long agricultural borrowers are eligible for

guaranteed loan assistance. In particular, the borrowing must be related to rural water supply projects and infrastructure. The limitations are suspended until September 30, 2007.

The guarantee provides an assurance for lenders to execute loans farmers need to do business if they are not otherwise credit-worthy. The guarantee covers 95% of a lender’s loss of principal and interest on a defaulted loan. The default rate is 1.4%.

The current eligibility limit is 15 years and bill supporters noted that the guaranteed loan program will leave many producers ineligible come January 2007. The bill extends the eligibility for another year and the funds can be used for purchase of farmland, livestock, feed, seed, farm equipment and fuel essential to farm operations.

The limit was determined to give farmers enough time to qualify for regular commercial credit but Congress recognizes that natural events such as drought, floods and adverse economic conditions put otherwise legitimate loans at risk.

Sponsor: Senator Tom Harkin (IA)

Vote: Passed Senate by Unanimous Consent December 6, 2006. Passed House by voice vote December 8, 2006

Cost to the taxpayers: No cost data available.

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