USDA to provide additional financial assistance to Farm loan borrowers facing financial risk

August 14, 2023 - The US Department of Agriculture (USDA) recently announced it will begin providing additional, automatic financial assistance for qualifying guaranteed Farm Loan Programs (FLP) borrowers who are facing financial risk. The announcement is part of the US$3.1 billion to help certain distressed farm loan borrowers that was provided through Section 22006 of the Inflation Reduction Act.

"USDA continues to make progress on our goal to provide producers access to the tools they need to help get back to financially viable path and ultimately succeed as thriving agricultural businesses." said Agriculture Secretary Tom Vilsack. "The financial assistance included in today's announcement will provide a fresh start for distressed borrowers with guaranteed farm loans and will give them the opportunity to generate long-term stability and success."

Since the Inflation Reduction Act was signed into law by President Biden in August 2022, USDA has provided approximately US$1.15 billion in assistance to more than 20,000 distressed borrowers as part of an ongoing effort to keep borrowers farming, remove obstacles that currently prevent many borrowers from returning to their land, and improve the way that USDA approaches borrowing and loan servicing in the long-term. The financial assistance that has been announced will provide qualifying distressed guaranteed loan borrowers with financial assistance similar to what was already provided to distressed direct local borrowers. Based on current analysis, the financial assistance announced today will assist an estimated approximately 3500 eligible borrowers, subject to change as payments are finalised.

An FLP guaranteed loan borrower is distressed if they qualify under one of the options below. FLP guaranteed borrowers who qualify under multiple options will receive a payment based on the option that provides the greatest payment amount:

• Payment of any outstanding delinquency on all qualifying FLP guaranteed loans as on Oct 18, 2022. This includes any guaranteed loan borrowers who did not receive an automatic payment in 2022 on that loan because they were not yet 60 days delinquent as of Sept 30, 2022, as well as guaranteed borrower that became delinquent on a qualifying FLP guaranteed loan between September 30, 2022, and Oct 18, 2022.
• Payment on a qualifying FLP guaranteed loan for which a guaranteed loan borrower received a loan restructure, which modified the guaranteed loan maturity date, between March 1, 2020 and August 11, 2023. The payment amount will be the lesser of the post-restructure annual instalment or the amount required to pay the loan in full. The guaranteed loan must not have been paid in full prior to Aug 11, 2023.
• Payments on certain deferred amounts on qualifying FLP guaranteed loans, not to exceed US$100,000, for guaranteed borrowers who received a deferral or another type of payment extension, for at least 45 days, between March 1, 2020 and Sept 30, 2022 from their guaranteed lender on that qualifying guaranteed loan in response to COVID-19, disasters, or other revenue shortfalls. The Inflation Reduction Act payment amount will be the lesser of the most recent deferral or extension amount on the qualifying FLP guaranteed loan, or the amount required to pay that loan in full. The guaranteed loan must not have been paid in full prior to Aug 11, 2023.
  

This assistance is only available for FLP guaranteed loan borrowers who did not or will not receive an initial payment on the same FLP guaranteed loan under Inflation Reduction Act assistance announced in October 2022.

Distresses guaranteed borrowers qualifying for this assistance will receive a United States Department of the Treasury check that is jointly payable to the borrower and the lender. These borrowers will also receive a letter from FSA informing them of Inflation Reduction Act assistance they will receive as well as instructions to make an appointment with their lender to process the payment and apply it to their qualifying guaranteed loan accounts. Guaranteed lenders will receive an Emil in the coming days informing them of this assistance and any next steps. Lenders will also receive letters informing them which borrowers will receive assistance and the amount of assistance they will receive.

Any distressed guaranteed borrowers who qualify for these forms of assistance and are currently in bankruptcy will be addressed using the same case-by-case review process announced in October 2022 for complex cases.

FSA will also provide relief to qualifying FLP guaranteed loan borrowers determined to be distressed borrowers based on liability for remaining federal debt subject to debt collection and garnishment after the liquidation of their guaranteed loan account as of July 31, 2023. This will allow some borrowers to potentially return to farming. Guaranteed borrowers who qualify for this assistance will have their federal debt paid automatically by FSA and will receive a letter informing them of the payment made on their federal debt.

All letters to qualify guaranteed loan borrowers will contain instructions for opting out of assistance if a borrower chooses to do so.

For more information, visit HERE.

 

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