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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 announced that beginning in April it will supply approximately $123 million in additional, automated monetary support for qualifying farm loan program debtors who are facing financial danger, as part of the $3.1 billion to assist distressed farm loan customers that was offered through Section 22006 of the Inflation Reduction Act (IRA). The statement constructs on monetary help used to borrowers through the very same program in October 2022.

The IRA directed USDA to expedite assistance to distressed debtors of direct or surefire loans administered by USDA's Farm Service Agency (FSA) whose operations deal with monetary threat. For example, in the October payments, farmers that were 60 days delinquent due to obstacles like natural catastrophes, the pandemic or other unanticipated circumstances were brought current and had their next installment paid to offer them breathing space.

"In a lot of cases, the rules surrounding our farm loan programs may really be detrimental to assisting a debtor return to an economically feasible path. As an outcome, some are pressed out of farming and others stuck under a debt problem that prevents them from growing or reacting to opportunities," said Agriculture Secretary Tom Vilsack. "Loan programs for the most recent and more susceptible producers need to have to do with supplying chance and tailored to expect and handle stumbles and obstacles along the way. Through this assistance, USDA is focusing on producing long-term stability and success for distressed debtors."

In October 2022, USDA offered roughly $800 million in preliminary IRA assistance to more than 11,000 delinquent direct and ensured debtors and roughly 2,100 borrowers who had their farms liquidated and still had staying debt. USDA shared that it would perform case-by-case evaluations of about 1,600 complex cases for possible preliminary relief payments, including cases of borrowers in foreclosure or personal bankruptcy. These case-by-case evaluations are underway.

At the same time in October 2022, USDA announced that it expected payments using different pandemic relief funding totaling roughly $66 million on over 7,000 direct loans to debtors who utilized the USDA Farm Service Agency's disaster-set-aside alternative throughout the COVID-19 pandemic. Most of these payments have actually been processed and USDA anticipates it will complete all such payments in April 2023.

New Assistance for Distressed Borrowers

FSA intends to offer the brand-new round of relief beginning in April to extra distressed borrowers. This will include around $123 million in automatic financial help for certifying Farm Loan Program (FLP) direct loan borrowers who meet particular requirements. Similar to the automated payments revealed in October 2022, qualifying customers will get an individual letter detailing the help as payments are made. Distressed customers' eligibility for these new categories of automatic payments will be figured out based on their situations since today. More details about the brand-new classifications that make up the $123 million in assistance revealed today and the particular amount of help a distressed borrower receives can be discovered described in this fact sheet, IRA Section 22006: Additional Automatic Payments, Improved Procedures, and Policy Recommendations.

To continue to make sure manufacturers are conscious of relief potentially offered to them, all manufacturers with open FLP loans will receive a letter detailing a brand-new chance to get support if they took specific extraordinary procedures to avoid delinquency on their FLP loans, such as handling more financial obligation, selling residential or commercial property or squandering pension. The letter will provide details on eligibility, the particular kinds of actions that might receive help, and the procedure for applying for and supplying the paperwork to seek that support.

These steps belong to a procedure USDA announced in addition to the October payments that is focused on helping debtors not able to make their next arranged installation. Earlier this year, all borrowers must have gotten a letter detailing the process for seeking this type of support even before they become overdue. Borrowers who are within 2 months of their next installment may seek a cashflow analysis from FSA using a recent balance sheet and operating plan to identify their eligibility.

Tax Resources

USDA will continue to deal with the Department of Treasury to assist customers understand the possible tax implications from the invoice of an individual retirement account payment, including that options might be available to possibly avoid or minimize any tax burden incurred as an outcome of getting this financial assistance.

In early April, USDA will send out a particular set of revised tax documents, educational materials and resources to debtors that got help in 2022, consisting of a link to a webinar hosted by a group of farm tax specialists to provide education on the alternatives offered. USDA can not provide tax suggestions and motivates customers to consult their own tax expert, however FSA is supplying academic materials for customers to be conscious 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 remove unnecessary hurdles, enhance loan making and loan maintenance and supply more flexibility on how loans are structured to maximize the opportunities for borrowers. Additional information on those modifications can be found in the connected fact sheet and are the start of a broader set of procedure improvements. The fact sheet also offers info on the 8, no-cost legislative propositions included in the 2024 President's Budget that are developed to enhance the customer experience.

USDA touches the lives of all Americans every day in so many favorable ways. In the Biden-Harris Administration, USDA is changing America's food system with a greater concentrate on more resilient local and local food production, fairer markets for all producers, ensuring access to safe, healthy and nutritious food in all neighborhoods, developing new markets and streams of income for farmers and manufacturers using environment clever food and forestry practices, making historic financial investments in facilities 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. For more information, visit www.usda.gov.