As the second quarter winds down, there is more genuine news for rural lenders than we have seen in a single quarter in some time. A major enforcement action reshaped the lender field, USDA cut the environmental red tape that slows construction deals, the agency is overhauling its technology and refreshing its leadership, and the Farm Bill advanced in both chambers. Here is what matters for your bank.
A Market Opening
On May 12, USDA revoked the approved-lender status of ten institutions in the Rural Development OneRD Guaranteed Lending Program, barring them from future participation. The agency tied the action to roughly $620 million in delinquent loans concentrated among those ten lenders.
While we do not necessarily agree with the USDA’s conclusions or its approach, the practical effect is worth noting. According to S&P Global Market Intelligence data as of April 30, the removed lenders held about $2.88 billion in outstanding OneRD principal, close to 21 percent of the roughly $14 billion commercial guaranteed portfolio. Several were high-volume originators. That demand does not disappear, and we see a clear opportunity for new entrants and disciplined community banks to gain access to the program now that some large lenders have been turned away. If you have wanted to grow your USDA volume, this is a window worth discussing.
NEPA Reform: Faster Environmental Clearance
This may be the most useful change of the quarter for any bank financing construction. Effective May 12, Rural Development adopted USDA’s modernized National Environmental Policy Act rule, finalized April 3. New construction projects previously triggered a NEPA review almost every time, and that review was often the longest pole in the tent for getting to closing.
Three changes drive the improvement. First, USDA consolidated seven separate agency-specific environmental regulations into a single department-wide framework, so one consistent set of rules now applies across all USDA agencies. Second, the rule broadens the set of categorical exclusions, the project types that can skip a full environmental assessment. Third, it gives the agency explicit flexibility to use judgment on when a full review is actually warranted. For borrowers and lenders, the bottom line is faster environmental clearance and faster closings on construction deals. We wrote up what this means in more detail on our blog.
USDA Loan Modernization
On June 4, USDA announced a sweeping modernization of its loan and grant technology, consolidating more than 130 separate systems into a single digital platform expected to manage about 1.2 million active files. In plain terms, USDA is retiring legacy systems, some dating to the 1960s, and moving off paper. For lenders, the promised payoff is a unified application intake, online eligibility and payment tools, a single customer file, and faster processing across all Rural Development programs on one consistent technology stack. No firm timeline was given, and rollouts like this take time, but the direction is right: less administrative drag on the deals you bring to USDA.
Leadership at Rural Development
On June 23, Secretary Rollins announced a slate of leadership appointments across Rural Development. Joe Gilson, who had been Chief of Staff at Rural Development, steps up to Deputy Under Secretary, and Neal Robbins, the outgoing Deputy Under Secretary, moves to Senior Advisor to the Secretary for rural engagement. The announcement also named a new Chief of Staff for the Rural Business-Cooperative Service, which houses the B&I and OneRD guarantee programs, along with new regional and state operations leads.
It is easy to skim past personnel news, but leadership matters more in this program than most. The people running Rural Development set the tone for how quickly applications move, how consistently the regulations get interpreted across state offices, and whether the recent reforms actually translate into faster closings. Continuity in those seats, especially with the modernization and NEPA changes mid-rollout, is good news for lenders who need predictable processing. We will be watching how the new team executes.
Farm Bill: Where Things Actually Stand
The Farm Bill advanced on both ends of the Capitol this quarter. The House passed H.R. 7567, the Farm, Food, and National Security Act of 2026, on April 30 by a vote of 224 to 200. On June 23, the Senate Agriculture Committee released its own version, the Agricultural Act of 2026, often called Farm Bill 2.0, as a discussion draft. The committee is targeting consideration of its bill in early August.
Several provisions across the two versions matter for our world:
You can read the House-passed text here and the Senate discussion draft here.
Here is the honest read on what comes next. The two chambers now have different bills. The Senate has to mark up and pass its version, the differences get reconciled in conference, and the compromise goes back through both the House and Senate before it can reach the President. The early-August target is for the Senate committee step, not final passage, so there is still real distance to travel. We are further along than we have been in years, but any of these provisions could change along the way. We will keep watching.
Looking Ahead
Between the lender shakeup, the faster environmental reviews, the modernization push, and a refreshed leadership team, this is an unusually active moment in the program. If you want to talk through capturing some of that freed-up volume, or anything else, reach out anytime.
Warm regards,
Your friends at Guaranteed Lending Specialists
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