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 beginning in April it will provide around $123 million in additional, automated financial support for qualifying farm loan program borrowers who are facing monetary danger, as part of the $3.1 billion to assist distressed farm loan customers that was provided through Section 22006 of the Inflation Reduction Act (IRA). The announcement builds on financial assistance used to debtors through the same program in October 2022.

The IRA directed USDA to speed up support to distressed customers of direct or guaranteed loans administered by USDA's Farm Service Agency (FSA) whose operations deal with financial threat. For instance, in the October payments, farmers that were 60 days delinquent due to challenges like natural catastrophes, the pandemic or other unanticipated situations were brought present and had their next installation paid to provide breathing room.

"In a lot of cases, the rules surrounding our farm loan programs may really be damaging to assisting a borrower return to a financially viable course. As a result, some are pressed out of farming and others stuck under a debt burden that avoids them from growing or responding to chances," said Agriculture Secretary Tom Vilsack. "Loan programs for the latest and more susceptible producers need to be about providing chance and customized to expect and manage stumbles and hurdles along the way. Through this support, USDA is focusing on generating long-lasting stability and success for distressed debtors."

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

At the exact same time in October 2022, USDA revealed that it prepared for payments utilizing different pandemic relief funding amounting to roughly $66 million on over 7,000 direct loans to borrowers who utilized the USDA Farm Service Agency's disaster-set-aside alternative throughout the COVID-19 pandemic. The bulk of these payments have actually been processed and USDA expects it will finish all such payments in April 2023.

New Assistance for Distressed Borrowers

FSA means to offer the brand-new round of relief beginning in April to additional distressed customers. This will consist of roughly $123 million in automated monetary assistance for qualifying Farm Loan Program (FLP) direct loan customers who satisfy particular requirements. Similar to the automatic payments revealed in October 2022, qualifying customers will receive an individual letter detailing the support as payments are made. Distressed debtors' eligibility for these new categories of automated payments will be figured out based on their circumstances since today. More info about the brand-new categories that make up the $123 million in assistance announced today and the particular quantity of help 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 manufacturers know relief possibly readily available to them, all manufacturers with open FLP loans will receive a letter detailing a new opportunity to receive support if they took particular remarkable steps to prevent delinquency on their FLP loans, such as taking on more debt, offering residential or commercial property or squandering retirement accounts. The letter will supply details on eligibility, the particular types of actions that might receive support, and the procedure for getting and supplying the paperwork to seek that support.

These steps are part of a process USDA announced together with the October payments that is focused on assisting debtors unable to make their next arranged installment. Earlier this year, all customers should have gotten a letter detailing the procedure for seeking this type of assistance even before they end up being delinquent. Borrowers who are within two months of their next installment may seek a cashflow analysis from FSA utilizing a current balance sheet and running plan to determine their eligibility.

Tax Resources

USDA will continue to deal with the Department of Treasury to assist debtors comprehend the prospective tax implications from the invoice of an IRA payment, consisting of that alternatives might be available to possibly avoid or ease any tax problem incurred as an outcome of receiving this financial support.

In early April, USDA will send out a particular set of modified tax files, academic products and resources to debtors that received help in 2022, including a link to a webinar hosted by a group of farm tax professionals to offer education on the alternatives readily available. USDA can not provide tax advice and motivates borrowers to consult their own tax expert, but FSA is offering educational products for borrowers to be mindful of the options. USDA has tax-related resources offered at farmers.gov/ taxes.

Improved Procedures and Policy Recommendations

FSA is finalizing changes to its policy handbooks to get rid of unneeded hurdles, enhance loan making and loan servicing and offer more flexibility on how loans are structured to make the most of the chances for . Additional details on those changes can be discovered in the linked reality sheet and are the start of a broader set of process improvements. The truth sheet also supplies info on the 8, no-cost legal propositions included in the Fiscal Year 2024 President's Budget that are developed to improve the borrower experience.

USDA touches the lives of all Americans every day in so lots of positive ways. In the Biden-Harris Administration, USDA is changing America's food system with a greater focus on more durable regional and regional food production, fairer markets for all producers, making sure access to safe, healthy and healthy food in all communities, constructing new markets and streams of income for farmers and manufacturers utilizing climate smart food and forestry practices, making historic financial investments in infrastructure and tidy energy abilities in rural America, and dedicating to equity across the Department by getting rid of systemic barriers and constructing a workforce more representative of America. For more information, see www.usda.gov.