The U.S. Department of Agriculture (USDA) has unveiled an additional $250 million in automatic payments for distressed direct and guaranteed farm loan borrowers under Section 22006 of the Inflation Reduction Act. This financial aid is part of USDA’s continued effort to stabilize agricultural communities by helping farmers and ranchers manage debt, retain their land, and continue their operations despite economic hardships.
Since President Biden signed the Inflation Reduction Act into law in August 2022, the USDA has provided roughly $2.4 billion in assistance to more than 43,900 distressed farm loan borrowers across the country. The newly announced $250 million will extend support to around 4,650 additional borrowers, with $235 million directed toward 4,485 delinquent borrowers who have not yet received assistance, and $15 million allocated to 165 borrowers with Shared Appreciation Agreements.
“USDA continues to invest in the future of producers through our loan portfolio,” said Zach Ducheneaux, USDA Farm Service Agency (FSA) Administrator. “These ongoing investments made possible by the Inflation Reduction Act help to ensure that more than 4,600 producers across the country will see another production season.”
Breakdown of Assistance:
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Direct Borrower Delinquency Assistance: The USDA will automatically apply payments toward any outstanding delinquencies on qualifying direct loans that are one or more days past due as of September 30, 2024. These borrowers must not have received prior Section 22006 assistance.
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Guaranteed Borrower Delinquency Payments: For guaranteed loan borrowers who are at least 30 days past due as of September 30, 2024, the USDA will issue automatic payments via checks made out jointly to the borrower and their lender.
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Shared Appreciation Agreements (SAA): These agreements require distressed borrowers to share a portion of any property value appreciation with the FSA when their real estate loan is written down. As some SAAs mature following a pause during the COVID-19 pandemic, borrowers are facing new repayment obligations. To mitigate this burden, the USDA will make payments to resolve outstanding repayment agreements for borrowers whose SAAs mature as of September 30, 2024.
The USDA is implementing a case-by-case review process for distressed borrowers currently in bankruptcy. Direct and guaranteed loan borrowers will receive a letter from the USDA’s FSA explaining their assistance and outlining next steps.
Long-Term Impact and Economic Benefits:
The USDA conducted an Economic Impact Analysis of the $2.2 billion in prior payments to distressed borrowers, revealing that the assistance will:
- Create or support nearly 49,000 jobs.
- Increase household income by $2.471 billion.
- Contribute $3.556 billion to the U.S. GDP.
- Generate $5.663 billion in sales of final goods and services.
These payments have also helped prevent farm foreclosures, with USDA foreclosures dropping significantly. In fiscal year 2023, the USDA reported just 12 farm foreclosures, a sharp decline from the 10-year annual average of 51. Additionally, Chapter 12 farm bankruptcies have dropped from an average of 493 cases annually to 139 in 2023.
As part of its broader support efforts, the USDA has also introduced new reforms and tools to enhance loan program accessibility, including the Loan Assistance Tool and an Online Loan Application feature, which allows farmers to apply for loans and submit supporting documents electronically.
Looking Ahead:
The USDA remains committed to supporting American farmers and ranchers by offering solutions that address current financial challenges while creating a more resilient agricultural loan system. As part of the Biden-Harris administration’s larger agricultural agenda, USDA programs aim to create fairer markets for all producers, promote sustainable practices, and improve rural infrastructure.
For more information on the USDA’s loan programs and to contact local FSA offices, farmers can visit the USDA’s Farm Service Agency website at fsa.usda.gov.