Farm Credit lender sues business for failed nonfarm loan

A Farm Credit System lender is suing a Tennessee distillery after the enterprise’s nonfarm commercial loan to the business has gone south, according to a local media report.

Failed Business Loan: As reported by the Moore County [Tenn.] Observer, Farm Credit Mid-America filed a complaint seeking the appointment of a receiver to take control of Nearest Green Distillery of Shelbyville, Tenn., alleging that the company has failed to meet its financial obligations, resulting in debts totaling an estimated $100 million.

Farm Credit Nonfarm Push: The report comes as FCS lenders—which compete with community banks for agricultural loans while leveraging tax and regulatory advantages as government-sponsored enterprises—work to advance proposals that would allow FCS loans for “essential community facilities,” a potentially broad category of nonfarm loans.

What It Means for Community Banks: ICBA strongly opposes efforts to continue expanding FCS authority while the GSE uses its government advantages to siphon loans from community banks. In testimony before a House Agriculture subcommittee last month, ICBA detailed its concerns with proposals to expand the FCS’s tax and regulatory advantages while urging lawmakers to place tighter restrictions on the FCS’s collection of uninsured deposits through “funds held” accounts.