- Key insight: The Independent Community Bankers of America and America's Credit Unions asked the Department of Agriculture to make several procedural changes to its process for removing institutions from a loan guarantee program.
- What's at stake: The trade groups are asking the USDA to implement a series of reforms, including informing lenders they are under review, sharing its findings and allowing lenders an opportunity to respond.
- Supporting data: USDA reports more than $14 billion in outstanding loans under the program.
Lenders are pushing back against the Department of Agriculture in the wake of its decision to
Two trade groups — the Independent Community Bankers of America and America's Credit Unions — sent a letter to Agriculture Secretary Brooke Rollins on Friday questioning the process USDA followed prior to announcing last month that it had banned the 10 lenders from its OneRD Loan Guarantee Program.
"The associations are deeply concerned the USDA is not being fully transparent with lenders about the agency's criteria for evaluating and determining adverse action as well as the procedural process used to facilitate termination and enforcement," ICBA and ACU wrote in the June 26 letter. "[Impacted lenders] report the USDA did not notify them of any concerns related to specific loans before their eligibility to participate in the guaranteed lending program was suddenly … suspended."
"Unless lenders understand the USDA's rationale and procedures for terminating lenders from the program, lenders may lose confidence in the USDA as a source of guaranteed funding," the groups added.
In all, USDA barred five banks, three credit unions and two nondepository lenders from participating in OneRD. It claimed the 10 lenders accounted for nearly half of the program's delinquent loans. "The Trump Administration has absolutely no tolerance for the irresponsible and noncompliant actions of these lenders," Rollins stated in a May 12 press release.
USDA's move caught the attention of Iowa Republican Sen. Joni Ernst, the chairwoman of the Senate Committee on Small Business and Entrepreneurship. Earlier this month, Ernst sent a letter to Kelly Loeffler, head of the Small Business Administration,
But the lenders have not stayed silent, At least three indicated they intended to appeal their removal from OneRD. And now, two prominent Washington, D.C. trade groups are suggesting the USDA failed to give the impacted lenders any opportunity to respond to its determination. In addition, the groups claimed that the agency's decision to "abruptly terminate lenders" could destabilize the secondary market for USDA loans.
"Based on USDA's recent action, there is real concern for participating lenders about the secondary market impacts going forward," the ICBA and ACU wrote. The trade groups asked USDA to implement a series of reforms, including informing lenders they are under review, sharing its findings and allowing lenders an opportunity to respond.
USDA did not respond to a request for comment by deadline. In a previous comment to American Banker, an agency spokesperson termed the revocations an "unprecedented" response taken after the agency identified "significant findings of noncompliance."
In a
OneRD is USDA's flagship loan guarantee program. It is broadly similar to SBA's flagship 7(a) program, with the government providing guarantees on riskier loans that couldn't qualify for conventional credit. According to USDA, outstanding OneRD loans totaled $14 billion on May 31. About $1.6 billion of that total was classified as delinquent. In February, USDA said it had paid out more than $300 million in repurchases and other loan losses in the previous 12 months.
OneRD's fiscal 2026 funding authority is about $2.9 billion.
