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The Agency published a proposed rule for the Business and Industry Guaranteed Loan Program on September 15, 2014 (78 FR 22044), which, when finalized, would revise the 1996 B&I regulations.  While there have been some minor modifications to the B&I Guaranteed Loan Program regulations since 1996, this action is in response to the implement 2014 Farm Bill provisions and makes needed refinements to the regulation.  These changes are design to enhance the program, improve efficiency, correct minor inconsistencies, clarify the regulations, and ultimately reduce delinquencies. The Agency held several lender meetings throughout the country to see how changes to the program could benefit lenders who utilize the program. The proposed changes being considered may result in a lower the subsidy rate.  The rule, when finalized, is intended to increase lending activity, expand business opportunities, and create more jobs in rural areas, particularly in areas that have historically experienced economic distress.

Statement of Need:

With the passage of the 2014 Farm Bill, there is the need to conform certain portions of the B&I Guaranteed Loan Program regulations with requirements found in the 2014 Farm Bill, such as the addition of cooperative equity security guarantees, the locally and regionally grown agricultural food products initiative, and exceptions to the rural area definition. In addition, with the passage of time, the Agency proposed revisions intended to improve program delivery and administration, leverage program resources, better align the regulation with the program's goals and purposes, clarify the regulations, and reduce delinquencies and defaults. These proposed revisions may also improve program subsidy costs.  A reduction in program subsidy costs may increase funding availability for additional projects, further improving the economic conditions of rural America. This may result in increased lending activity, the expansion of business opportunities, and the creation of more jobs in rural areas.

Summary of the Legal Basis:

Consolidated Farm and Rural Development Act, as amended by the 2008 and 2014 Farm Bill.

Alternatives:

The only alternative would be the status quo, which is not an acceptable alternative.

Anticipated Costs and Benefits:

The benefits of the proposed rule include a possible reduction in loan losses, a lower subsidy rate, and streamline program delivery. The program changes have a cumulative effect of lowering the program cost; however, the amount of the change in cost cannot be estimated with any reasonable precision.

Risks:

There are no associated risks to the public health, safety or the environment.