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USDA puts nearly $800 million to helping distressed borrowers

The U.S. Department of Agriculture have put nearly $800 million toward helping distressed borrowers with qualifying farm loans through USDA.

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USDA building in Washington, D.C.
File photo
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WASHINGTON — The U.S. Department of Agriculture have put nearly $800 million toward helping distressed borrowers with qualifying farm loans through USDA.

The funding announced Tuesday, Oct. 18, is part of the $3.1 billion in assistance for distressed farm loan borrowers provided through the Inflation Reduction Act. The IRA directed USDA to expedite assistance to distressed borrowers of direct or guaranteed loans administered by USDA’s Farm Service Agency whose operations face financial risk.

USDA provides access to credit to approximately 115,000 producers who cannot obtain sufficient commercial credit through direct and guaranteed farm loans, which do not include farm storage facility loans or marketing assistance loans.

“Through no fault of their own, our nation’s farmers and ranchers have faced incredibly tough circumstances over the last few years,” said Agriculture Secretary Tom Vilsack in a statement. “The funding included in today’s announcement helps keep our farmers farming and provides a fresh start for producers in challenging positions.”

National Farmers Union President Rob Larew called it "welcome news."

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“Let’s be clear — this debt relief is going to help keep family farms in business, not just for this generation but for generations to come,” said NFU President Rob Larew. “It’s promising to see how USDA is implementing provisions of the Inflation Reduction Act that will help thousands of distressed loan borrowers. Today’s announcement is the result of years of advocacy and leadership and is a big step toward improving the way USDA approaches lending."

The USDA says work has started to bring relief to distressed farmers. More than 13,000 borrowers have received assistance in the following ways:

  • Approximately 11,000 delinquent direct and guaranteed borrowers had their accounts brought current. USDA also paid the next scheduled annual installment for these direct loan borrowers giving them peace of mind in the near term.
  • Approximately 2,100 borrowers who had their farms foreclosed on and still had remaining debt have had this debt resolved in order to cease debt collections and garnishment, relieving that burden that has made getting a fresh start more difficult.

USDA plans to administer up to an additional $500 million in payments to benefit the following distressed borrowers:

  • USDA will administer $66 million in separate automatic payments, using COVID-19 pandemic relief funds, to support up to 7,000 direct loan borrowers who used FSA’s disaster-set-aside option during the pandemic to move their scheduled payments to the end of their loans.
  • USDA is also initiating two case-by-case processes to provide additional assistance to farm loan borrowers. Under the first new process, FSA will review and assist with delinquencies from 1,600 complex cases, including cases in which borrowers are facing bankruptcy or foreclosure. The second new process will add a new option using existing direct loan servicing criteria to intervene more quickly and help an estimated 14,000 financially distressed borrowers who request assistance to avoid even becoming delinquent.

More information is available on the Inflation Reduction Act webpage on farmers.gov . USDA says additional announcements will be made as the department implements additional changes. The department says the effort also will include "adding more tools and relaxing unnecessary restrictions through assistance made possible by Congress through the IRA." Further assistance and changes to the approach will be made in subsequent phases.

Similar to other USDA assistance, all of these payments will be reported as income and borrowers are encouraged to consult their tax advisors. USDA also has resources and partnerships with cooperators who can provide additional assistance and help borrowers navigate the process.

USDA says it also is "working on making transformational changes to how USDA goes about loan servicing in the long run so that borrowers are provided the flexibility and opportunities needed to address the inherent risks and unpredictability associated with agricultural operations and remain in good financial standing."

USDA in January 2021 suspended foreclosures and other adverse actions on direct farm loans due to the pandemic and encouraged guaranteed lenders to follow suit. USDA recently reiterated this request to guaranteed lenders to provide time for the full set of IRA distressed borrower assistance to be made available before lenders take irreparable actions.

Producers can explore available loan options using the Farm Loan Discovery Tool on farmers.gov ( also available in Spanish ) or by contacting their local USDA Service Center . Producers can also call the FSA call center at 877-508-8364 between 8 a.m. and 7 p.m. Eastern. USDA has tax-related resources available at farmers.gov/taxes .

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