Agricultural Credit and Rural Development Act of 1985

Agricultural Credit and Rural Development Act of 1985 - Amends the Consolidated Farm and Rural Development Act to direct the Secretary of Agriculture to establish a graduated scale of water and waste facilities grant rates, with higher rates for lower population and income areas. Grants maximum rates to communities of 1500 or less and an income level not exceeding the higher of the poverty line prescribed by the Office of Management and Budget, or 80 percent of the Statewide nonmetropolitan median household income.

Directs the Secretary to establish a water and waste facility project selection system based upon population, income, and health hazard problems.

Authorizes facility redevelopment payments and training grants. Gives priority to rural area projects.

Authorizes funds to test cost-effective methods of serving rural communities which do not have and cannot afford safe drinking water services.

Changes the eligibility standard for five-percent water and waste facility loans from one based on the Federal poverty level to one based on having an income level below 80 percent of the Statewide nonmetropolitan median family income. Establishes a seven percent loan for areas not qualifying for five-percent loans but whose income level is less than 100 percent of the Statewide figure.

Provides that interest rates on loans for water and waste facilities and loans for essential community facilities shall be the lower of the rate in effect at the time of loan approval or loan closing.

Limits any business and industrial loan which may be made, insured, or guaranteed by the Farmers Home Administration (FmHA) to $25,000,000.

States that eligibility for FmHA emergency disaster loans shall be based soley on criteria under such Act without regard to whether the Secretary designates a county under a disaster declaration.

Revises county committee structure and selection provisions.

Authorizes FY 1986 through 1988 appropriations for: (1) real estate loans; (2) operating loans; and (3) emergency disaster loans; (4) water and sewer facilities; (5) industrial development; and (6) community facilities. Requires at least 25 percent of farm ownership and operating loans to be available for low-income borrowers.

Amends the Agricultural Act of 1949 to authorize advance recourse commodity loans for the 1986 through 1990 crops.