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USDA to Provide Additional Financial Assistance to Distressed Farm Loan Program Borrowers

USDA Urban Agriculture Grants Climate Smart Farm Loan

The U.S. Department of Agriculture (USDA) announced today that it would provide approximately $123 million in automatic financial assistance to qualifying farm loan program borrowers facing financial risk. This assistance is part of the $3.1 billion relief package provided through Section 22006 of the Inflation Reduction Act (IRA) to help distressed farm loan borrowers. The IRA directed USDA to provide expedited assistance to distressed borrowers of direct or guaranteed loans administered by the USDA’s Farm Service Agency (FSA). The automatic payments will be provided to additional distressed borrowers from April 2023, and each borrower will receive an individual letter detailing the assistance as payments are made. The USDA will also send revised tax documents, educational materials, and resources to borrowers that received assistance in 2022 to provide education on the tax implications of receiving financial assistance.

Agriculture Secretary Tom Vilsack stated that the regulations surrounding farm loan programs could, in many cases, be disadvantageous for borrowers seeking a financially viable path. Consequently, some borrowers are forced to exit the industry, while others cannot take advantage of opportunities due to their overwhelming debt burden. Vilsack stressed that loan programs for new and vulnerable producers should prioritize opportunity and be adaptable to expect and manage setbacks and challenges. The USDA’s financial assistance aims to generate long-term stability and success for distressed borrowers, fostering a supportive environment for them to thrive.

The USDA’s financial assistance will generate long-term stability and success for distressed borrowers, enabling them to return to a financially viable path. The USDA had previously 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. The new round of relief payments builds on the previous assistance provided to borrowers through the same program in October 2022. Eligibility for the automatic payments will be determined based on the borrowers’ circumstances as of today. FSA will conduct a case-by-case review of about 1,600 complex cases for potential initial relief payments, including cases of borrowers in foreclosure or bankruptcy. The USDA’s financial assistance will help distressed farm loan program borrowers mitigate their financial risk and provide a measure of relief for those facing financial hardship.

Image provided by the USDA

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