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USDA Updates Farm Loan Programs to Increase Financial Freedom for Agricultural Producers

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USDA Updates Farm Loan Programs to Increase Financial Freedom for Agricultural Producers

August 7, 2024 admin Comments Off

WASHINGTON, Aug. 7, 2024 – The U.S. Department of Agriculture (USDA) today announces changes to the Farm Service Agency’s (FSA) Farm Loan Programs, effective Sept. 25, 2024 — changes that are intended to increase opportunities for farmers and ranchers to be financially viable. These improvements, part of the Enhancing Program Access and Delivery for Farm Loans rule, demonstrate USDA’s commitment to improving farm profitability through farm loans designed to provide important financing options used by producers to cover operating expenses and purchase land and equipment.

“USDA recognizes that Farm Service Agency’s loan making and servicing activities are critical for producers, especially in tough times. Providing borrowers the financial freedom to increase profits, save for long-term needs and make strategic investments is the best way to ensure the nation’s farmers and ranchers can build financial equity and resilience,” said Zach Ducheneaux, FSA Administrator. “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.”

Farm loan policy changes outlined in the Enhancing Program Access and Delivery for Farm Loans rule, are designed to better assist borrowers to make strategic investments in the enhancement or expansion of their agricultural operations.

The three most notable policy changes include:

  • Establishing a new low-interest installment set-aside program for financially distressed borrowers. Eligible financially distressed borrowers can defer up to one annual loan installment per qualified loan at a reduced interest rate, providing a simpler and expedited option to resolve financial distress in addition to FSA’s existing loan servicing programs.
  • Providing all eligible loan applicants access to flexible repayment terms that can increase profitability and help build working capital reserves and savings. By creating upfront positive cash flow, borrowers can find opportunities in their farm operating plan budgets to include a reasonable margin for increased working capital reserves and savings, including for retirement and education.
  • Reducing additional loan security requirements to enable borrowers to leverage equity. This reduces the amount of additional security required for direct farm loans, including reducing the frequency borrowers must use their personal residence as additional collateral for a farm loan.

Learn more: usda.gov