Bill aims to aid rural businesses through loan guarantee

MADISON — Rep. Gary Tauchen saw his hopes realized Nov. 26 when a bill, with the Bonduel Republican as its primary Assembly sponsor, that expands access to loan money for rural business owners, including dairy manufacturers and processors, became law with Democratic Gov. Tony Evers’ signature.

The bill is noteworthy as it passed both houses of the legislature, with strong Republican majorities, unanimously. It is now known as 2019 Wisconsin Act 62. Tauchen had earlier expressed the hope the bill would be speedily signed.

When it passed the Assembly earlier in November, Tauchen expressed satisfaction with the bill’s passage that increases state loan guarantees to make lending easier. “If farmers and processors do well, the rest of the economy does well,” he said.

He repeated that thought and added rural businesses will have more opportunities to expand and modernize in remarks made to the Shawano Rotary Club on Nov. 25.

The Legislative Reference Bureau stated in its analysis the bill launches a pilot program under Wisconsin Housing and Economic Development Authority administration. The bureau, a nonpartisan legislative resource, drafts all legislation for the legislature and writes analyses of legislation.

Using existing funds available through the Agribusiness Guarantee Program, $3 million in loan guarantee authority would support rural development projects — including brick-and-mortar investments, equipment and machinery, marketing and working capital.

The pilot would guarantee up to 25% of a loan or $750,000, whichever is less. The borrower is required to pay back the entirety of the loan, with a state commitment only made in the event of a default.

The Legislative Reference Bureau noted the term of a loan guarantee is revised to not exceed: 10 years for land and buildings; five years for inventory, equipment and machinery; and two years for permanent working capital and marketing expenses.

The bill established a closing fee that may not exceed 1.5% for a loan guarantee. Current law does not address closing fees.

The pilot program sunsets as of July 1, 2024, according to the bureau.

The bill had its origins with the Wisconsin Dairy Task Force 2.0, a joint effort of the state Department of Agriculture, Trade and Consumer Protection and the University of Wisconsin. Tauchen said the task force, like its predecessor in the 1980s, was a response to a prolonged downturn in agriculture.

The task force’s goal was to suggest actions needed to maintain a viable and profitable dairy industry in Wisconsin, according to its website.

The Bonduel-area representative’s bill was based on one of the 51 recommendations made.

“Wisconsin’s dairy industry has faced a myriad of challenges in recent years, from the tumult of international trade to low milk prices that stress the financial picture for our farm family partners,” said John Umhoefer, executive director of the Wisconsin Cheese Makers Association, a major supporter of the bill. “This legislation will spark lending opportunities for our rural businesses.”