[Congressional Record Volume 143, Number 95 (Tuesday, July 8, 1997)]
[Senate]
[Page S7023]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           RURAL CREDIT NEEDS

 Mr. BENNETT. Mr. President, I address today an issue of 
significant importance to my home State of Utah. As you know, the State 
of Utah is largely rural. Of 29 counties in the State of Utah, 25 are 
classified as rural by the U.S. Department of Agriculture [USDA]. For 
this reason, I have a keen interest in rural issues in general and, as 
a member of the banking committee, rural credit issues in particular.
  I have read with interest the recent reports from the Rural Policy 
Research Institute [RUPRI], the General Accounting Office [GAO], and 
the USDA on rural credit needs. I have also reviewed the proceedings of 
the Kansas City Fed's conference on ``Financing Rural America.'' These 
documents present no surprises for those of us who represent rural 
areas. While each study approaches its task in a unique manner, all of 
these reports are similar in their conclusions. They note that while 
rural financial markets work reasonably well, not all market segments 
are equally well served. They all agree that small businesses from 
rural areas can have a difficult time obtaining financing, have fewer 
credit options, and may well pay more for their credit than comparable 
urban enterprises. At a time when small businesses are being recognized 
for their valuable contributions to our economic growth and stability, 
small businesses are facing increasing demands for credit, and Small 
Business Administration funding is frequently being challenged.
  Historically, rural economic activity has been synonymous with 
agricultural production. Today, this is no longer the case. The number 
of farms in the United States has declined dramatically from about 6 
million in the first half of this century, to about 2 million farms in 
1990. While agriculture is still an important component of rural 
America and its credit needs are reasonably well addressed; the 
financial needs of rural nonagricultural business require attention now 
more than ever.
  While government sponsored enterprises [GSE's] have contributed to 
the successes of agriculture and rural housing by providing competitive 
and reliable credit, there has been no GSE financing for rural 
nonagricultural businesses. As all of these reports point out, credit 
options for nonagricultural business are relatively scarce, expensive, 
and sometimes nonexistent. Yet, as the GAO and the Fed reports point 
out, economic development in these areas is actually hindered by these 
borrowers' difficulties in obtaining capital.
  The facts are worrisome. As the RUPRI study points out, many rural 
areas were bypassed by recent employment growth. Existing rural 
employment is concentrated in slow-growth or declining industries. Job 
growth in rural areas, particularly rural areas that are not adjacent 
to metropolitan areas, is biased toward low-skill, low-wage activities. 
USDA has stated that ``Rural economies are characterized by a 
preponderance of small businesses, fewer and smaller local sources of 
financial capital, less diversification of business and industry, and 
fewer ties to non-local economic activity.''
  Rural nonagricultural businessmen seek to be contributing members of 
our economic society. They do not seek a Federal hand out. They look 
for equal credit opportunities and an opportunity to participate fully 
in the same business activities of their urban counterparts.
  As a political body, we need to consider the plight of rural 
nonagricultural businesses and the great potential that they offer our 
economy. I bring this issue to the attention of my colleagues in the 
hope we can work together and review constructive solutions to this 
program.

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