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 The
IRA directed USDA to expedite assistance to distressed borrowers
of direct or guaranteed loans administered by USDA’s Farm
Service Agency (FSA) whose operations face financial risk. For
example, in the October payments, farmers that were 60 days
delinquent due to challenges like natural disasters, the
pandemic or other unexpected situations were brought current and
had their next installment paid to give them breathing room.
In October 2022, USDA provided approximately $800 million in
initial IRA assistance to more than 11,000 delinquent direct and
guaranteed borrowers and approximately 2,100 borrowers who had
their farms liquidated and still had remaining debt. USDA shared
that it would conduct case-by-case reviews of about 1,600
complex cases for potential initial relief payments, including
cases of borrowers in foreclosure or bankruptcy. These
case-by-case reviews are underway.
At the same time in October 2022, USDA announced that it
anticipated payments using separate pandemic relief funding
totaling roughly $66 million on over 7,000 direct loans to
borrowers who used the USDA Farm Service Agency’s
disaster-set-aside option during the COVID-19 pandemic. The
majority of these payments have been processed and USDA
anticipates it will complete all such payments in April 2023.
New Assistance for Distressed Borrowers
FSA intends to provide the new round of relief starting in April
to additional distressed borrowers. This will include
approximately $123 million in automatic financial assistance for
qualifying Farm Loan Program (FLP) direct loan borrowers who
meet certain criteria. Similar to the automatic payments
announced in October 2022, qualifying borrowers will receive an
individual letter detailing the assistance as payments are made.
Distressed borrowers’ eligibility for these new categories of
automatic payments will be determined based on their
circumstances as of today. More information about the new
categories that make up the $123 million in assistance announced
today and the specific amount of assistance a distressed
borrower receives can be found described in this fact sheet, IRA
Section 22006: Additional Automatic Payments, Improved
Procedures, and Policy Recommendations.
To continue to make sure producers are aware of relief
potentially available to them, all producers with open FLP loans
will receive a letter detailing a new opportunity to receive
assistance if they took certain extraordinary measures to avoid
delinquency on their FLP loans, such as taking on more debt,
selling property or cashing out retirement accounts. The letter
will provide details on eligibility, the specific types of
actions that may qualify for assistance, and the process for
applying for and providing the documentation to seek that
assistance.
These steps are part of a process USDA announced along with the
October payments that is focused on assisting borrowers unable
to make their next scheduled installment. Earlier this year, all
borrowers should have received a letter detailing the process
for seeking this type of assistance even before they become
delinquent. Borrowers who are within two months of their next
installment may seek a cashflow analysis from FSA using a recent
balance sheet and operating plan to determine their eligibility.
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Tax Resources
USDA will continue to work with the Department of Treasury to help
borrowers understand the potential tax implications from the receipt
of an IRA payment, including that options may be available to
potentially avoid or alleviate any tax burden incurred as a result
of receiving this financial assistance.
In early April, USDA will send a specific set of
revised tax documents, educational materials and resources to
borrowers that received assistance in 2022, including a link to a
webinar hosted by a group of farm tax experts to provide education
on the options available. USDA cannot provide tax advice and
encourages borrowers to consult their own tax professional, but FSA
is providing educational materials for borrowers to be aware of the
options. USDA has tax-related resources available at farmers.gov/taxes.
Improved Procedures and Policy Recommendations
FSA is finalizing changes to its policy handbooks to remove
unnecessary hurdles, improve loan making and loan servicing and
provide more flexibility on how loans are structured to maximize the
opportunities for borrowers. Additional details on those changes can
be found in the linked fact sheet and are the start of a broader set
of process enhancements. The fact sheet also provides information on
the eight, no-cost legislative proposals included in the Fiscal Year
2024 President’s Budget that are designed to improve the borrower
experience.
USDA touches the lives of all Americans each day in
so many positive ways. In the Biden-Harris Administration, USDA is
transforming America’s food system with a greater focus on more
resilient local and regional food production, fairer markets for all
producers, ensuring access to safe, healthy and nutritious food in
all communities, building new markets and streams of income for
farmers and producers using climate smart food and forestry
practices, making historic investments in infrastructure and clean
energy capabilities in rural America, and committing to equity
across the Department by removing systemic barriers and building a
workforce more representative of America. To learn more, visit www.usda.gov.
[Illinois / USDA - FPAC - Farm
Service Agency]
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