USDA Looking To Update Loan Program, Spur Reinvestment In Rural America

Sep 12, 2018

On the campaign trail, President Donald Trump promised to revitalize rural America, specifically through increased investment in infrastructure. And his ag secretary, Sonny Perdue, wants to modernize the U.S. Department of Agriculture.

One rural bank representative said there’s a key piece to doing that: Fixing an outdated and burdensome loan application process to make it easier to access capital.

The USDA has a portfolio of $223.6 billion in loans aimed at rural development. To spur investments, the USDA is holding several national listening sessions. The first was Monday at the federal building in Denver.

Sherry Waner is the specialized lending division at Southwest Bank, and helps facilitate these loans and walks clients through the application process.

First Southwest Bank, located in southern Colorado, has a team of three people who specialize in the USDA loan application process, Waner said — a resource that few other rural banks can offer.   

“They may only have five to seven people in the entire bank,” she said. “It’s not logistically feasible for them to have people who specialize in the utilization of these programs.”

Waner’s first recommendation to the committee was to create an online portal. At the moment, the USDA requires original signatures on most documents, meaning applications are only accepted via mail. That, Waner said, requires shipping and many as 1,000 pages.

“You have to physically get those documents to the USDA, versus providing it in electronic format, which many other agencies that provide these same [loans] offer,” she said.   

The USDA is focusing on four guaranteed loan programs for rural development: business and industry;improving drinking water and waste disposal systems; and repairing road repairs, hospitals and rec centers. The business loans are open to individual business owners and farmers, while the rest are designed for municipalities and towns.

Sallie Clark is the director of the USDA’s Office of Rural Development in Colorado, and said she hopes that the listening sessions will help spread the word about USDA loans and improve the program overall.

“This is a good segue into looking to the regulatory process with lenders to make it easier for them to access that capital,” she said.   

In Colorado, USDA loans are used to build things like new wastewater management systems or install broadband internet.

Waner’s department works mostly with individual business loans, and those applications sometimes need an environmental impact study for construction projects, which can cost upwards of $5,000 and can take several months to complete. They must also be carried out by a third-party organization, which she said can be hard to come by in some rural areas.

“It does make the process a little onerous to be able to utilize those programs to get those services to the people who need them the most in those rural areas,” she said.

According to the White House, 23 million people in rural areas still lack sufficient broadband access and the economies in these areas have been slow to recover from the recession.

Follow Esther on Twitter: @estherhonig

Editor's note: an earlier version of this story incorrectly named First Southwest Bank.