USDA Announces Debt Assistance for Distressed Borrowers

On Tuesday, October 18, 2022, the USDA announced the phased implementation of critical debt assistance for distressed borrowers of direct or guaranteed loans whose agricultural operations are at financial risk. In its announcement, the USDA indicated that $800 million in automatic assistance to eligible borrowers has already been paid out from the $3.1 billion in assistance that Congress authorized for distressed farm loan borrowers through Section 22006 of the Inflation Reduction Act (IRA).

The first phase of the USDA's implementation of the IRA's debt assistance for producers is intended to "stop the bleeding" and "help to ensure distressed farm loan borrowers can stay in or re-enter the business of agriculture." In this first phase, borrowers may qualify for assistance in one of three ways:

1. Automatic assistance for borrowers who were 60 or more days delinquent on their FSA direct or guaranteed loan as of September 30, 2022, or borrowers who had loan collateral liquidated but still had remaining debt;

2. Payments from available pandemic assistance funds (separate from IRA funding) to direct loan borrowers who used disaster set-aside to delay their to the final maturity date of their loan will automatically receive a payment for the set-aside amount that remains outstanding;

3. Payments to borrowers based on a case-by-case review in instances of either complex loans involving delinquencies (including bankruptcy and foreclosure) or cases under existing loan servicing procedures that are determined that an operation has insufficient cash flow to make the next loan installment payment.

"It is our hope that Tribal producers will be among the recipients of long-awaited assistance and that these provisions will provide a lifeline to our producers who were at risk of losing their operations," said Kari Jo Lawrence, Intertribal Agriculture Council's (IAC) Executive Director.

While it is not the loan forgiveness our Tribal producers were promised under the American Rescue Plan Act (ARPA), the USDA's expedited payments under the IRA provide much-needed, immediate assistance to producers that was neither available during the pendency of the ARPA Section 1005 litigation, nor guaranteed at the conclusion of the Section 1005 litigation. IAC remains committed to advocating for Tribal producers—financial, technical, regulatory, and statutory—to ensure a level playing field to provide the basic food necessities for Tribal communities and any other markets they would like to enter.

The goal of USDA's efforts is to keep farmers and ranchers in business by removing obstacles that prevent them from long-term stability. This first round of payments is vital for farmers and ranchers to continue producing the food essential to our nation's well-being. The October 18 announcement is the first phase in a broader effort that will encompass assistance and more tools made available by Congress through the IRA.

In addition to the debt assistance available through Section 22006, Tribal producers may also be eligible for discrimination payments under Section 22007 of the IRA. The USDA published a Request for Information on October 14, 2022, seeking input from producers and others about how to design and implement the discrimination relief program. Additional information about opportunities to participate in this process is available on the USDA website here.

Read the full USDA press release here, or contact your regional Intertribal Agriculture Council (IAC) technical assistance specialist for more information.

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