Despite the financial challenges caused by the coronavirus pandemic, rural bankers expect farm loan defaults to expand by only 5% over the next 12 months.
That’s one of the findings from the May Rural Mainstreet Index, a monthly survey of rural bank CEOs conducted by Creighton University economist Ernie Goss
Goss says the restructuring of farm loans is one reason why loan defaults are expected to remain relatively low.
“It has a lot to do with the way the bankers and the farmers are working it out in terms of restructuring loans,” Goss says, “Extending the terms of payment and, in some cases, delaying the defaults to potentially later in the year.”
Goss says the bankers report that the pandemic has been “devastating” for retailers in rural communities.
“Because individuals in rural areas are buying online from the big-ticket companies like Walmart and Target, and also Amazon, having them delivered. So these communities are really taking it-it’s tough on the retailers there.”
Goss says one of the few positive responses in the banker survey came from a question about the federal government’s Paycheck Protection Program (PPP). One hundred percent of the bankers surveyed said the program was successful, and more than one of five said they support PPP expansion.
The survey is sent to rural bank CEOs in ten states of the Upper Midwest and High Plains, including Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North and South Dakota and Wyoming.