New round of USDA relief available for distressed farm loan borrowers

[April 22, 2023]  By Zeta Cross | The Center Square contributor

(The Center Square) – Starting this month, $123 million of U.S. Department of Agriculture relief funding is available to Farm Service Agency borrowers with direct and FSA guaranteed loans.

John Gehrke, chief loan officer with the Illinois FSA, said distressed farm loan borrowers, including borrowers facing foreclosure or bankruptcy, may be eligible for new payment options.

The vast majority of Illinois farmers are keeping up with their loan payments and are able to borrow money to put their crops in the ground this spring.

“It’s not a crisis in Illinois. But it is something that we are always watching for because agriculture is volatile,” Gehrke said. “So many factors go into making money in agriculture.”

Thanks to the new round of USDA taxpayer funding, FSA loan officers will have additional tools to aid farmers who may have used their cash reserves or cashed in their retirement accounts to keep up with their FSA payments, Gehrke said.

“They may have opened accounts that have been built up. They may have diverted some of their money to keep current with us, which may have put them in a bind elsewhere,” Gehrke said.

Hundreds of accounts will be reviewed on a case-by-case basis, he said. The FSA loan officers' goal is to assist as many farmers as they can, Gehrke said. Too many borrowers wait too long before they make their problems known, he said.

“We want to keep a dialogue open,” Gehrke said. “We want people who are in financial distress to come visit the local office and talk to us about their concerns.”

Gehrke said the agency wants to help people and can change rates, terms and payment dates.

One of the issues that the FSA is facing is a growing volume of loans and a shortage of people to work directly with borrowers.

“When we make a loan, we would like to go out and do a farm visit,” Gehrke said, “have what we call a year-end analysis with the customer. We want to see how they did.”

FSA prefers to build relationships with borrowers so that when times get tough, that relationship will already be built, he said.

“But what we are finding is that we do not have that extra time available to go out to the farms and get to know the borrowers,” he said.

When times get rough, it makes it harder for borrowers to communicate with FSA, Gehrke said.

If a borrower is having cash flow problems, new options from the USDA this spring may allow the FSA to help them out. Gehrke urges farmers to call their FSA local office. Loan officers will take a look at the overall picture of each individual farming operation, he said.