Effective September 25, 2024, the USDA Farm Service Agency (FSA) will implement changes to its Farm Loan Programs. The four main objectives behind these changes are to provide financial freedom, expand opportunities, increase resilience, and provide equitable access. In a press release about the loan reforms, Zach Ducheneaux, FSA Administrator, said, “Implementing these improvements to our Farm Loan Programs is the next step in our ongoing commitment to removing lending barriers that may prevent access to credit for borrowers, especially those who need it most.”
Key Changes
Low-Interest Installment Set-Aside Program: A new program for financially distressed borrowers allows deferral of up to one annual loan installment per qualified loan at a reduced interest rate. The distressed borrower payment set-aside interest will accrue on any principal portion of the set-aside installment at the rate of one eighth of a percent, to reduce the burden of payment allowing farm and ranch operations to continue.
Flexible Repayment Terms: Access to flexible repayment terms for all eligible loan applicants will increase profitability and build working capital reserves and savings. Offering better loan terms enables producers to establish working capital reserves and have the financial freedom to devote more time and energy to the operations of their farm or ranch. Producers will also be able to opt into an interest-only payment for the first year of their loan term to start building a capital reserve with a long-lasting impact on families, communities, and generational transfer.
Reduced Loan Security Requirements: Reducing the additional security required to obtain direct farm loans, will ensure that lenders can restructure their loans without jeopardizing additional assets. This new provision will also reduce the use of personal residences as collateral to protect the homes and land of farmers and ranchers.
Important Dates
Helpful Links
The USDA FSA Farm Loan Program reforms are particularly significant for American Indian and Alaska Native producers, who often face unique barriers in accessing financial resources. The FSA has demonstrated exceptional dedication to working with Tribal producers by making its programs and services more impactful across 68.5 million acres of Tribal land and has been instrumental in supporting the agricultural and economic development of Tribal communities. The Intertribal Agriculture Council commends FSA's commitment to understanding and addressing the specific needs of producers, ensuring that these programs will provide financial assistance and promote long-term sustainability and growth for Indian Country. To learn more, visit www.fsa.usda.gov.
For the full press release, please visit the USDA website.