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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 starting in April it will offer approximately $123 million in additional, automated monetary assistance for qualifying farm loan program borrowers who are dealing with monetary danger, as part of the $3.1 billion to help distressed farm loan debtors that was provided through Section 22006 of the Inflation Reduction Act (IRA). The statement builds on monetary assistance provided to borrowers through the same program in October 2022.

The IRA directed USDA to speed up help to distressed borrowers of direct or guaranteed loans administered by USDA's Farm Service Agency (FSA) whose operations face financial threat. For instance, in the October payments, farmers that were 60 days delinquent due to difficulties like natural disasters, the pandemic or other unanticipated circumstances were brought current and had their next installment paid to provide breathing space.

"In too numerous cases, the guidelines surrounding our farm loan programs may really be damaging to helping a customer get back to a financially feasible course. As an outcome, some are pressed out of farming and others stuck under a financial obligation problem that prevents them from growing or responding to opportunities," said Agriculture Secretary Tom Vilsack. "Loan programs for the newest and more susceptible producers need to be about providing opportunity and customized to anticipate and handle stumbles and obstacles along the method. Through this help, USDA is concentrating on producing long-lasting stability and success for distressed customers."

In October 2022, USDA supplied approximately $800 million in initial IRA assistance to more than 11,000 delinquent direct and guaranteed borrowers and roughly 2,100 borrowers who had their farms liquidated and still had remaining financial obligation. USDA shared that it would conduct case-by-case reviews of about 1,600 complex cases for prospective preliminary relief payments, consisting of cases of customers in foreclosure or personal bankruptcy. These case-by-case reviews are underway.

At the same time in October 2022, USDA announced that it anticipated payments using different pandemic relief financing amounting to approximately $66 million on over 7,000 direct loans to customers who utilized the USDA Farm Service Agency's disaster-set-aside option throughout the COVID-19 pandemic. The majority of these payments have actually been processed and USDA expects it will complete all such payments in April 2023.

New Assistance for Distressed Borrowers

FSA plans to offer the brand-new round of relief starting in April to extra distressed debtors. This will include around $123 million in automatic financial help for qualifying Farm Loan Program (FLP) direct loan debtors who meet particular requirements. Similar to the automatic payments revealed in October 2022, certifying borrowers will receive a specific letter detailing the help as payments are made. Distressed debtors' eligibility for these new classifications of automatic payments will be identified based on their scenarios since today. More details about the brand-new categories that make up the $123 million in support announced today and the specific quantity of help a distressed debtor receives can be discovered explained in this reality sheet, IRA Section 22006: Additional Automatic Payments, Improved Procedures, and Policy Recommendations.

To continue to make sure manufacturers are aware of relief possibly offered to them, all manufacturers with open FLP loans will receive a letter detailing a new chance to receive help if they took certain extraordinary steps to prevent delinquency on their FLP loans, such as taking on more debt, selling residential or commercial property or squandering retirement accounts. The letter will provide details on eligibility, the particular types of actions that may qualify for support, and the procedure for requesting and offering the documents to seek that help.

These steps become part of a process USDA announced in addition to the October payments that is focused on helping debtors unable to make their next arranged installment. Earlier this year, all debtors need to have gotten a letter detailing the process for seeking this kind of support even before they end up being delinquent. Borrowers who are within 2 months of their next installation may seek a cashflow analysis from FSA utilizing a recent balance sheet and operating strategy to identify their eligibility.

Tax Resources

USDA will continue to deal with the Department of Treasury to help debtors comprehend the prospective tax implications from the receipt of an IRA payment, including that choices might be offered to potentially avoid or relieve any tax problem sustained as a result of receiving this financial help.

In early April, USDA will send out a specific set of modified tax files, instructional products and resources to debtors that received help in 2022, consisting of a link to a webinar hosted by a group of farm tax experts to provide education on the alternatives available. USDA can not provide tax recommendations and encourages customers to consult their own tax expert, but FSA is offering educational products for customers to be familiar with the choices. USDA has tax-related resources offered at farmers.gov/ taxes.

Improved Procedures and Policy Recommendations

FSA is completing changes to its policy handbooks to remove unnecessary hurdles, improve loan making and loan maintenance and offer more versatility on how loans are structured to optimize the chances for customers. Additional details on those modifications can be found in the linked truth sheet and are the start of a broader set of process improvements. The reality sheet likewise supplies info on the 8, no-cost legislative proposals included in the Fiscal Year 2024 President's Budget that are created to improve the debtor experience.

USDA touches the lives of all Americans each day in a lot of favorable methods. In the Biden-Harris Administration, USDA is transforming America's food system with a greater concentrate on more durable local and regional food production, fairer markets for all producers, guaranteeing access to safe, healthy and healthy food in all neighborhoods, building brand-new markets and streams of income for farmers and producers utilizing environment smart food and forestry practices, making historical investments in facilities and tidy energy capabilities in rural America, and dedicating to equity across the Department by eliminating systemic barriers and developing a labor force more representative of America. To learn more, visit www.usda.gov.