Beginning in April, the U.S. Department of Agriculture will provide approximately $123 million in additional, automatic financial assistance for qualifying farm loan program borrowers who are facing financial risk. The money is part of the $3.1 billion to help distressed farm loan borrowers that was provided in the Inflation Reduction Act.
This latest tranche of assistance builds on funds provided in October last year when the agency provided $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. In the October payments, farmers that were 60 days delinquent due to challenges such as natural disasters, the pandemic or other unexpected situations were brought current and had their next installment paid.
Also in October 2022, USDA anticipated payments using separate pandemic relief funding totaling roughly $66 million on over 7,000 direct loans to borrowers who used the USDA Farm Service Agency’s disaster-set-aside option during the COVID-19 pandemic. The majority of these payments have been processed and USDA said it plans to complete all such payments in April.
The latest round of funding will include approximately $123 million in automatic financial assistance for qualifying Farm Loan Program direct loan borrowers who meet certain criteria. Similar to the automatic payments announced in October, qualifying borrowers will receive an individual letter detailing the assistance as payments are made. Distressed borrowers’ eligibility for these new categories of automatic payments will be determined based on their circumstances at the end of March.
According to USDA, all producers with open FLP loans will receive a letter detailing a new opportunity to receive assistance if they took certain extraordinary measures to avoid delinquency on their FLP loans, such as taking on more debt, selling property or cashing out retirement accounts. The letter will provide details on eligibility, the specific types of actions that may qualify for assistance, and the process for applying for and providing the documentation to seek that assistance.
USDA will work with the Department of Treasury to help borrowers understand the potential tax implications from the receipt of an IRA payment, including options may be available to potentially avoid or alleviate any tax burden incurred as a result of receiving this financial assistance.