Rural Credit:

Availability of Credit for Agriculture, Rural Development, and Infrastructure

RCED-93-27: Published: Nov 25, 1992. Publicly Released: Dec 15, 1992.

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Pursuant to legislative requirement, GAO reviewed credit availability in rural America, focusing on: (1) the availability of credit for agricultural production, rural business development, and rural infrastructure development; and (2) lending institutions' investments in their communities.

GAO found that: (1) in general, agricultural production credit was available for creditworthy borrowers, although lenders were using more stringent loan standards; (2) certain borrowers, such as beginning farmers, those growing nontraditional crops, and minorities, had difficulty obtaining credit; (3) some states established loan guarantee programs to provide credit assistance to minority borrowers; (4) while rural lenders believed credit was available for rural businesses, state and local officials perceived a lack of credit, particularly for entrepreneurs, starting companies, and minority-owned businesses requiring debt or equity capital; (5) many small rural businesses also needed technical assistance; (6) many rural roads and bridges were in poor condition, and many water and wastewater treatment systems did not meet environmental standards; (7) most rural roads were not eligible for federal funds, and local governments' tax bases were not large enough to support road building and repair; (8) many small rural communities could not afford to update their wastewater systems due to high per capita costs, and federal legislation limited state and local governments' ability to issue bonds; and (9) it could not determine the extent to which rural lending institutions invest in their own communities, because lending data was not sufficiently geographically detailed, but future reporting requirements might lead to the collection of more geographic information on loans.

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