CFPB releases report documenting rural banking issues

The Consumer Financial Protection Bureau (CFPB) recently issued a report titled, Data Spotlight: Challenges in Rural Banking Access (report), documenting the challenges rural communities in America face relating to access to financial services. The CFPB report highlights several points such as reliance on physical branches and smaller financial institutions by rural areas, credit invisibility, and the use of non-bank credit. The CFPB has launched a rural initiative to respond to specific needs of rural America. The CFPB will also conduct roundtables with stakeholders—both in-person and online, and work with the U.S. Department of Agriculture, Housing and Urban Development, and Treasury along with other agencies. This report focuses on the demographic and economic picture of rural America and the effects this picture has on access to financial services and the overall financial health of Americans in non-metro areas. Let’s look at the key points of the report.

“Access to credit for farms and small businesses is essential to the economic health of rural communities and rural employment”

In the report, the CFPB reports the number of farms has decreased from 6.8 million in the U.S. in 1935 to only 2 million remaining today. The report highlights the reliance many farmers have on the use of credit to buy farming products and supplies such as seeds, fertilizer, machinery, and livestock. While many farmers rely on credit to purchase farming inputs, the report documents how many farmers have had issues accessing lending “on fair terms” and how women and racial minorities have also faced mistreatment. Farmers seeking credit “disproportionately depend on loans from small community banks, which constitute[s] 70% of agricultural lending from all commercial banks.” This section of the report underscores the importance of credit to rural communities. The report emphasizes the reliance small businesses have on access to credit and the reliance rural communities have on small businesses for employment, highlighting how the health of rural communities is implicitly connected to the access to credit and other financial products.


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