Hoeven’s bipartisan, bicameral bill provides rural utilities with penalty-free loan refinancing

U.S. Sen. John Hoeven (R-ND) on July 2 introduced a bipartisan, bicameral bill that would allow for the refinancing of loans under the U.S. Department of Agriculture’s Rural Utilities Service (RUS) for the nation’s small, rural electric and telecommunications providers.

“Electric cooperatives and telecommunications providers are critical to the quality of life in rural areas,” Sen. Hoeven said. “The restrictions on RUS loans hamper the ability of these organizations to cope with the challenges of COVID-19.”

Sen. Hoeven sponsored the Flexible Financing for Rural America Act, S. 4152, with original cosponsor U.S. Sen. Tina Smith (D-MN), to permit electric cooperatives and small, rural telecom providers to refinance their RUS debt at current market rates without penalty. Identical legislation, H.R. 7483, was introduced on July 2 by U.S. Reps. Vicky Hartzler (R-MO) and Tom O’Halleran (D-AZ) in the U.S. House of Representatives.

Currently, America’s rural electric cooperatives hold approximately $43 billion in RUS Electric Loans, while small, rural broadband providers hold about $3 billion in RUS Telecom Loans, according to information provided by Sen. Hoeven’s office, which noted that current law allows the RUS to charge significant penalties when borrowers refinance these loans.

The savings under S. 4152 would amount to roughly $2 million per year for the average rural electric cooperative, which could help the company gain flexibility in managing cash-flow, according to the information.

“The Fed reduced interest rates specifically to help businesses through this difficult time, and it makes sense to enable rural electric cooperatives and telecoms to benefit from this important tool, supporting a stronger recovery in our rural communities,” said Sen. Hoeven.

The legislation is supported by the National Rural Electric Cooperative Association, NTCA–The Rural Broadband Association, the North Dakota Association of Rural Electric Cooperatives, and the Broadband Association of North Dakota.