The United States Department of Agriculture (USDA) announced that beginning in April it will provide approximately $123 million in additional financial assistance for qualifying farm loan program borrowers who are facing financial risk. This is a part of the $3.1 billion designated to help farm loan members that was provided through Section 22006 of the Inflation Reduction Act (IRA). This is added to the financial assistance offered to farmers through the same program in October 2022.
The IRA directed USDA to quicken assistance to 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 factors such as natural disasters, the pandemic or other unexpected circumstances were brought current assistance and had their next installment paid to relieve future stress.
“Loan programs for the newest and more vulnerable producers must be about providing opportunity and tailored to expect and manage stumbles and hurdles along the way. Through this assistance, USDA is focusing on generating long-term stability and success for distressed borrowers,” said Agriculture Secretary Tom Vilsack.
In October 2022, USDA provided approximately $800 million in initial IRA assistance to more than 11,000 direct and guaranteed borrowers and approximately 2,100 borrowers who had their farms liquidated and still had remaining debt. USDA also shared that it would conduct case-by-case reviews of about 1,600 cases for potential initial relief payments, including cases of borrowers in foreclosure or bankruptcy. These case-by-case reviews are currently underway.
NEW ASSISTANCE FOR STRUGGLING FARMERS
FSA plans to provide the new round of relief starting in April to additional distressed borrowers. This includes approximately $123 million in automatic financial assistance for qualifying Farm Loan Program (FLP) direct loan borrowers who meet certain criteria. Qualifying borrowers will receive an individual letter elaborating on the assistance as payments are made. Eligibility for these new categories of automatic payments will be decided based on their circumstances as of today. More information about the new categories can be found described in this fact sheet, IRA Section 22006: Additional Automatic Payments, Improved Procedures, and Policy Recommendations.
Earlier this year, all borrowers should have received a letter detailing the process for acquiring this type of assistance even before they become delinquent. Borrowers who are within two months of their next installment may seek a cash flow analysis from FSA using a recent balance sheet and operating plan to determine their eligibility.
TAX RESOURCES
USDA will continue to partner 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 has tax-related resources available at farmers.gov/taxes.
Source: USDA News Release