CBS19

A bill before the U.S. House of Representatives aims to help Rural Utilities Service borrowers refinance their debt and stay afloat during the economic downturn.

Congresswoman Abigail Spanberger has co-sponsored the Flexible Financing for Rural America Act, which was introduced by Representatives Vicky Hartzler (Missouri) and Tom O’Halleran (Arizona).

According to a release, this bill will reduce the barriers that prevent such borers from refinancing their debt so they can take advantage of lower market rates.

“Central Virginians are still facing the hard facts of economic uncertainty due to the COVID-19 pandemic. Some of the local companies that have been hit hardest by the worsening economic crisis are rural utility service providers. Many Seventh District residents depend on businesses like electric co-ops and small telecom providers for reliable power and affordable internet access, tools that are more essential than ever,” said Spanberger. “The Flexible Financing for Rural America Act would give these local service providers the flexibility they need to take advantage of low interest rates and refinance their debt, without facing expensive, burdensome penalties from the USDA. During this challenging period, we should be reducing the number of hoops people have to jump through to keep their businesses running and maintain service for their customers.”

All three of the electric cooperatives that serve the Seventh Congressional District of Virginia are RUS borrowers: Rappahannock Electric Cooperative, Central Virginia Electric Cooperative, and Southside Electric Cooperative.

The release says RUS does not allow borrowers to refinance their debt for the purpose of taking advantage of lower interest rates, unlike most private lenders.

While there are some circumstances that will allow refinancing, the penalties imposed are costly and significant.

The bill would let RUS borrowers like electric cooperatives and small telecom providers refinance debt at current market rates, granting their more flexibility regarding their cash flow, which can make a major difference while such providers are struggling during poor economic conditions.

It would also prohibit RUS, a division of the U.S. Department of Agriculture, from imposing penalties or fees on borrowers.