USDA Revises Farm Loan Programs in an Attempt to Increase Equity
The United States Department of Agriculture’s (USDA) agricultural loan programs are being updated to better serve existing borrowers, especially previously underrepresented farmers. These enhancements are part of USDA’s commitment to increasing equity across all programs, including farm loans, which offer critical access to finance for operational expenditures and land and equipment acquisition Bridge consolidation program.
“USDA is dedicated to reviewing the challenges that all borrowers experience, particularly those in economic hardship, new and starting, socially disadvantaged, or otherwise underrepresented farmers,” stated Zach Ducheneaux, Administrator of USDA’s Farm Service Agency (FSA). “We know that loan origination and servicing operations are crucial for producers, particularly during difficult economic times. This enhancement to our agricultural loan programs addresses farmers’ requirements and, more critically, includes equitable relief mechanisms to guarantee they get a fair shake.”
The 2018 Farm Bill permitted FSA to grant equitable relief to certain direct loan borrowers who are in violation of program rules as a result of their good faith reliance on an FSA official’s material action, recommendation, or inaction. Previously, borrowers were often obliged to return the loan promptly or convert it to a non-program loan with higher interest rates, less favorable conditions, and restricted loan service.
The FSA now has extra flexibility to help borrowers in certain circumstances. If the agency issued inaccurate information to an existing direct loan borrower, the borrower may be entitled to equitable remedies. The FSA may help the borrower by allowing the borrower to retain their loans at their present rates or other conditions associated with the loan that was judged to be noncompliant, or by providing the borrower with other equitable relief for the loan as the Agency deems appropriate.
USDA urges farmers to contact their local loan authorities to ensure they fully grasp the variety of loan and service choices available to help them establish, grow, or sustain their business.
Equitable assistance is one of many adjustments to USDA’s direct and guaranteed loan programs permitted by the 2018 Farm Bill. Previously adopted modifications include the following:
Adding more elements as acceptable experience to the current three-year agricultural experience criterion for Direct Farm Ownership financing.
Allowing socially disadvantaged and starting farmer candidates to get a guarantee of 95% instead of the standard 90% guarantee.
Extending the criteria of veteran farmers and offering extra advantages to them.
Permitting debtors who have obtained restructuring with a write-down to continue to be eligible for an emergency loan.
Increasing the number of qualifying topics and individuals covered by the Agriculture Certified Mediation Program.
Additional information about these revisions is available in the Federal Register notice dated March 8, 2022.
Additionally, the FSA has made recent initiatives to improve the equality of its programs. USDA announced this summer that it will provide $67 million in competitive loans under its new Heirs’ Property Refinancing Program to assist agricultural producers and landowners in resolving property ownership and succession difficulties involving heirs. Additionally, the FSA invested $4.7 million in partnerships with organizations that provide outreach and technical assistance to historically underserved farmers and ranchers, resulting in a fourfold increase in historically underserved producers’ participation in the Coronavirus Food Assistance Program 2 (CFAP 2), a critical pandemic assistance program, since April 2021.
Additionally, Secretary Vilsack announced in January 2021 a temporary halt of past-due debt collection and foreclosures for troubled direct loan borrowers in response to the economic hardship caused by the COVID-19 epidemic.
Producers may learn about possible loan choices by visiting farmers.gov/farmloandiscovery (also accessible in Spanish) or calling their local USDA Service Center. Agricultural producers continue to communicate with Service Center workers by phone, email, and other digital means. Due of the pandemic, several USDA Service Centers are only accessible to a restricted number of people. Producers may make an appointment with their local Service Center to review financing alternatives in person or over the phone.
USDA has a significant beneficial impact on the lives of all Americans on a daily basis. USDA is transforming America’s food system under the Biden-Harris Administration by putting a greater emphasis on resilient local and regional food production, ensuring fair markets for all producers, ensuring access to safe, healthy, and nutritious food in all communities, developing new markets and streams of income for farmers and producers using climate-smart agriculture and forestry practices, and making historic investments in rural America’s infrastructure and clean energy capabilities.