… we’d been denied because we engaged in animal reproduction…  I could prove to U.S. Bank that only 10% of our income was from animal reproduction…



Forbidden: The Curious Case of an Agriculture Loan Denied


by Chris Bennett, AgWeb 

Sep 04, 2019


Rhoda Rein was stunned by the bank’s decision—agriculture loan denied. The 25-year U.S. Bank customer, anticipating approval on a $27,000 operating loan, listened in disbelief as a bank representative cited the rationale behind Rein’s denial: animal reproduction is forbidden.


Is animal reproduction an activity deemed ineligible for a bank loan? Yes, in Rein’s case, and the rejection was triggered specifically due to her operation’s involvement in horse breeding. The details of Rein’s loan denial may draw concern from livestock producers across the United States, particularly due to the explicit language in bank documents delineating Rein’s rejection, and the seemingly contradictory explanations offered by U.S. Bank.


Not Appropriate?


Twenty minutes east of Denver, alongside her husband, Darren Miller, Rein runs a 46-stall horse training and breeding business on 40 acres—Darren Miller Stables, Inc. Rein, 53, and Miller, 57, were instrumental in founding the Colorado Reined Cowhorse Association (CRCA), and have served on the board of directors for the RMQHA, RMRHA and NRCHA. Miller is an AQHA, NRCHA and NSHA judge.


Since the mid-1990s, Rein has been a client of U.S. Bank at the Hampden Crossing branch, obtaining business loans on a consistent basis. In 2003, she opened a line of credit (cash flow manager) attached to Darren Miller Stables, revolving at a roughly 8% interest rate. In 2018, the interest rate steadily rose, climbing to 11.25% by April 2019. Alarmed, Rein consulted with Tracey Romero, her U.S. Bank representative, regarding a rate decrease. Boiled down, Rein chose to apply for a brand new loan of $27,000: Wipe the slate clean and start over with a lower interest rate. According to Rein, the NAICS code 112920 (equine production) was used in the loan application.


However, when the paperwork came back, the loan was denied. The initial application was turned down April 21; an appeal was turned down April 24. Do not pass go. No loan, period.


On May 1, U.S. Bank sent Rein an explanatory letter: “After careful review of your application, we are unable to extend credit to you at this time for the following reasons: Product is not considered appropriate for this industry.”


Rein visited the Hampden Crossing branch to get an explanation on May 8. “I couldn’t believe it and Tracey also seemed shocked,” Rein recalls. “I went into Tracey’s office and she said we’d been denied because we engaged in animal reproduction. She had already appealed because it was an existing line of credit with a big history. We’d been there almost 30 years, but even the appeal was denied.”


Erik Venning, Hampden Crossing branch manager, was also present, according to Rein. “Erik walked in and spoke with us, and listened while Tracey read off of a piece of paper out loud: ‘It says the reason you’re denied has something to do with animal reproduction.’”


(The Hampden Crossing branch of U.S. Bank was contacted by Farm Journal and directed all questions toward U.S. Bank communications.)


Seated on the opposite side of the desk, Rein could not make out the text on the paper. “I asked them for a copy of the paper, but Tracey said, ‘I can’t give it to you; it’s an internal document.’ I was allowed to listen to the text, but not allowed to read what was on the paper. Still today, I’ve never seen the document.”


Significantly, Darren Miller Stables’ income was derived almost entirely from horse training, Rein explains. “I could prove to U.S. Bank that only 10% of our income was from animal reproduction, and Tracey told me when she appealed the underwriter’s decision, she told them that, but that U.S. Bank had a list of internal businesses it didn’t support. The underwriter didn’t have a problem with horse training, but an issue with animal reproduction. Seriously?”


A Prohibited Industry ...


Contradictions and Codes ...


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