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 approximately $123 million in extra, automated financial support for qualifying farm loan program debtors who are facing financial threat, as part of the $3.1 billion to assist distressed farm loan borrowers that was supplied through Section 22006 of the Inflation Reduction Act (IRA). The statement develops on monetary support provided to customers through the very same program in October 2022.

The IRA directed USDA to expedite help to distressed customers of direct or guaranteed loans administered by USDA's Farm Service Agency (FSA) whose operations face monetary threat. For instance, 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 space.

"In a lot of cases, the rules surrounding our farm loan programs may in fact be damaging to helping a customer return to an economically practical course. As an outcome, some are pushed out of farming and others stuck under a financial obligation problem that avoids them from growing or responding to opportunities," stated Agriculture Secretary Tom Vilsack. "Loan programs for the latest and more vulnerable producers should have to do with providing chance and tailored to anticipate and manage stumbles and hurdles along the method. Through this assistance, USDA is concentrating on generating long-term stability and success for distressed customers."

In October 2022, USDA offered around $800 million in preliminary IRA support to more than 11,000 overdue direct and guaranteed customers and around 2,100 customers who had their farms liquidated and still had remaining financial obligation. USDA shared that it would carry out case-by-case reviews of about 1,600 complex cases for prospective initial relief payments, including cases of borrowers in foreclosure or insolvency. These case-by-case reviews are underway.

At the very same time in October 2022, USDA announced that it expected payments using separate pandemic relief funding totaling approximately $66 million on over 7,000 direct loans to borrowers who used the USDA Farm Service Agency's disaster-set-aside choice during the COVID-19 pandemic. Most of these payments have been processed and USDA anticipates it will finish 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 consist of approximately $123 million in automated financial support for certifying Farm Loan Program (FLP) direct loan debtors who satisfy certain criteria. Similar to the automatic payments revealed in October 2022, qualifying borrowers will receive a private letter detailing the assistance as payments are made. Distressed debtors' eligibility for these brand-new categories of automatic payments will be identified based upon their circumstances as of today. More details about the new classifications that make up the $123 million in help announced today and the specific amount of help a distressed customer receives can be found described in this fact sheet, IRA Section 22006: Additional Automatic Payments, Improved Procedures, and Policy Recommendations.

To continue to make certain manufacturers know relief possibly available to them, all producers with open FLP loans will get a letter detailing a brand-new opportunity to get help if they took specific remarkable measures to prevent delinquency on their FLP loans, such as handling more debt, offering residential or commercial property or squandering retirement accounts. The letter will supply details on eligibility, the specific types of actions that might get approved for help, and the process for getting and providing the documentation to seek that assistance.

These steps belong to a process USDA revealed along with the October payments that is concentrated on assisting debtors unable to make their next scheduled installment. Earlier this year, all customers should have received a letter detailing the process for seeking this kind of assistance even before they become delinquent. Borrowers who are within two months of their next may seek a cashflow analysis from FSA utilizing a recent balance sheet and operating plan to identify their eligibility.

Tax Resources

USDA will continue to work with the Department of Treasury to help debtors comprehend the potential tax implications from the receipt of an IRA payment, consisting of that options may be readily available to potentially prevent or relieve any tax problem sustained as a result of getting this monetary assistance.

In early April, USDA will send a particular set of revised tax files, academic materials and resources to debtors that got support in 2022, consisting of a link to a webinar hosted by a group of farm tax professionals to provide education on the options available. USDA can not provide tax advice and encourages customers to consult their own tax professional, however FSA is offering educational materials for customers to be familiar with the alternatives. USDA has tax-related resources readily available at farmers.gov/ taxes.

Improved Procedures and Policy Recommendations

FSA is settling changes to its policy handbooks to remove unneeded difficulties, enhance loan making and loan servicing and provide more versatility on how loans are structured to take full advantage of the chances for debtors. Additional details on those changes can be discovered in the linked truth sheet and are the start of a wider set of process improvements. The fact sheet also supplies details on the 8, no-cost legal propositions consisted of in the Fiscal Year 2024 President's Budget that are designed to enhance the debtor experience.

USDA touches the lives of all Americans each day in numerous favorable ways. In the Biden-Harris Administration, USDA is changing America's food system with a greater concentrate on more durable regional and regional food production, fairer markets for all manufacturers, making sure access to safe, healthy and healthy food in all communities, constructing new markets and streams of earnings for farmers and manufacturers using environment smart food and forestry practices, making historical investments in infrastructure and tidy energy abilities in rural America, and devoting to equity throughout the Department by eliminating systemic barriers and building a labor force more representative of America. To read more, check out www.usda.gov.