USDA Announces Additional Assistance For Distressed Farmers Facing Financial Risk

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USDA Announces Additional Assistance for Distressed Farmers Facing Financial Risk

WASHINGTON, March 27, 2023 - The U.S. Department of Agriculture (USDA) today revealed that starting in April it will provide around $123 million in extra, automatic monetary assistance for qualifying farm loan program customers who are dealing with financial danger, as part of the $3.1 billion to help distressed farm loan debtors that was offered through Section 22006 of the Inflation Reduction Act (IRA). The announcement constructs on monetary assistance used to customers through the very same program in October 2022.

The IRA directed USDA to accelerate assistance to distressed borrowers of direct or guaranteed loans administered by USDA’s Farm Service Agency (FSA) whose operations deal with monetary danger. For instance, in the October payments, farmers that were 60 days overdue due to difficulties like natural disasters, the pandemic or other unexpected circumstances were brought current and had their next installment paid to provide breathing room.

“In a lot of cases, the rules surrounding our farm loan programs may in fact be destructive to assisting a borrower return to an economically practical path. As a result, some are pushed out of farming and others stuck under a debt concern that prevents them from growing or reacting to opportunities,” stated Agriculture Secretary Tom Vilsack. “Loan programs for the latest and more vulnerable producers need to be about supplying chance and customized to anticipate and manage stumbles and hurdles along the method. Through this support, USDA is focusing on producing long-lasting stability and success for distressed customers.”

In October 2022, USDA offered around $800 million in initial IRA help to more than 11,000 delinquent direct and ensured debtors and approximately 2,100 customers who had their farms liquidated and still had remaining debt. USDA shared that it would conduct case-by-case evaluations of about 1,600 complex cases for potential preliminary relief payments, including cases of customers in foreclosure or personal bankruptcy. These case-by-case evaluations are underway.

At the exact same time in October 2022, USDA announced that it expected payments using separate pandemic relief funding amounting to approximately $66 million on over 7,000 direct loans to borrowers who utilized the USDA Farm Service Agency’s disaster-set-aside choice throughout the COVID-19 pandemic. Most of these payments have been processed and USDA anticipates it will complete all such payments in April 2023.

New Assistance for Distressed Borrowers

FSA plans to supply the new round of relief starting in April to extra distressed customers. This will include around $123 million in automatic monetary help for certifying Farm Loan Program (FLP) direct loan debtors who satisfy certain requirements. Similar to the automatic payments revealed in October 2022, certifying debtors will receive a private letter detailing the assistance as payments are made. Distressed borrowers’ eligibility for these new categories of automatic payments will be figured out based upon their circumstances since today. More info about the new categories that comprise the $123 million in assistance revealed today and the specific quantity of assistance a distressed customer receives can be found explained in this truth sheet, IRA Section 22006: Additional Automatic Payments, Improved Procedures, and Policy Recommendations.

To continue to ensure producers are aware of relief possibly available to them, all producers with open FLP loans will get a letter detailing a new opportunity to get support if they took certain amazing procedures to avoid delinquency on their FLP loans, such as handling more debt, selling residential or commercial property or cashing out retirement accounts. The letter will provide information on eligibility, the particular types of actions that might certify for assistance, and the process for looking for and offering the documentation to seek that help.

These actions are part of a process USDA revealed along with the October payments that is focused on assisting customers unable to make their next scheduled installation. Earlier this year, all borrowers must have gotten a letter detailing the procedure for seeking this kind of support even before they become overdue. Borrowers who are within two months of their next installation may seek a cashflow analysis from FSA using a current balance sheet and operating plan to determine their eligibility.

Tax Resources

USDA will continue to deal with the Department of Treasury to assist borrowers understand the potential tax ramifications from the invoice of an IRA payment, including that options may be readily available to potentially avoid or minimize any tax burden incurred as a result of receiving this financial help.

In early April, USDA will send a specific set of revised tax documents, instructional materials and resources to borrowers that got help in 2022, including a link to a webinar hosted by a group of farm tax experts to offer education on the options readily available. USDA can not offer tax suggestions and motivates debtors to consult their own tax expert, but FSA is supplying educational materials for debtors to be familiar with the choices. USDA has tax-related resources offered at farmers.gov/ taxes.

Improved Procedures and Policy Recommendations

FSA is finalizing modifications to its policy handbooks to eliminate unnecessary hurdles, enhance loan making and loan servicing and provide more flexibility on how loans are structured to optimize the opportunities for . Additional information on those modifications can be found in the connected reality sheet and are the start of a more comprehensive set of procedure enhancements. The fact sheet also provides information on the 8, no-cost legal proposals included in the 2024 President’s Budget that are developed to improve the customer experience.

USDA touches the lives of all Americans each day in many favorable methods. In the Biden-Harris Administration, USDA is transforming America’s food system with a higher focus on more resistant local and local food production, fairer markets for all manufacturers, making sure access to safe, healthy and healthy food in all communities, building new markets and streams of earnings for farmers and manufacturers using environment wise food and forestry practices, making historical financial investments in infrastructure and clean energy abilities in rural America, and dedicating to equity throughout the Department by removing systemic barriers and constructing a workforce more representative of America. For more information, check out www.usda.gov.