We recognize that loan-making activities are critical for annual operating and family living expenses, term investments for equipment and livestock, emergency needs, and cash flow, especially in tough times.
USDA’s Farm Service Agency is providing additional flexibilities to provide producers with credit options in response to the coronavirus pandemic. Those include:
- Where not legally prohibited, FSA will accept FAXed or scanned signatures from customers and lenders.
- FSA will follow the most current state or local guidance for use of online or virtual notary services.
FSA is currently relaxing the loan-making process and adding flexibilities for servicing direct and guaranteed loans to provide credit to producers in need.
Suspending Debt Collection and Foreclosures
USDA has temporarily suspended non-judicial foreclosures, debt offsets or wage garnishments, and referring foreclosures to the Department of Justice. USDA is working with the U.S. Attorney’s Office to stop judicial foreclosures and evictions on accounts that were previously referred to the Department of Justice.
Additionally, USDA extended deadlines for producers to respond to loan servicing actions, including loan deferral consideration for financially distressed and delinquent borrowers. In addition, for the Guaranteed Loan program, flexibilities have been made available to lenders to assist in servicing their customers.
The temporary suspension is in place until further notice and is expected to continue while the national COVID-19 disaster declaration is in place. USDA will not be accelerating or foreclosing on any direct loans, regardless of payment status, while the suspension is in effect. Although some direct loan borrowers may have received a standardized form known as the “Notice of Intent to Accelerate”, they should rest assured that USDA is not pursuing any acceleration or foreclosure. More information can be found in this January 31, 2022 FSA letter to direct loan borrowers.
Contact the FSA office at your local USDA Service Center.
Relaxing the Loan Making Process
FSA is relaxing the loan making process and adding flexibilities for servicing direct and guaranteed loans to provide credit to producers in need. This includes:
- For direct loan applicants, FSA provides two notifications of an incomplete application. These notices give the applicant 30 calendar days total, to provide the additional information needed before the application is withdrawn. FSA loan officials will maintain close communication with applicants who are experiencing difficulties completing application requirements due to complications from COVID-19 and may grant the applicant an extension.
- Where lien searches cannot be properly completed due to local and state government office closures, applicants may be considered eligible and processing of the loan may continue without a county records search, assuming all other eligibility and loan making criteria can be satisfied.
- Preparing loan closing documents even if FSA is unable to complete lien and record searches because of closed government buildings. Once those searches are complete, FSA would close the loan.
- Closing loans if the required lien position on the primary security is perfected, even for loans that require additional security and those filings and recordings cannot be obtained because of closed government buildings.
- Extending the repayment period of annual operating loans beyond 18 months to help borrowers survive through unique periods of financial difficulty.
- Use of video conferencing to facilitate loan closings, where notary services are not required.
- For guaranteed loans, FSA may grant an extension to guaranteed lenders that are unable to provide a complete application within the normal timeframe because of reasons outside of their control caused by COVID-19. Because each applicant and lender’s circumstances are unique, extensions will be granted on a case-by-case basis.
- If lenders need to extend credit to a customer that would normally require an FSA guarantee, but the lender is unable to apply for a guarantee due to the various pandemic restrictions in place, FSA will be as flexible as possible when evaluating the test for credit if the lender requests a guarantee on that loan at a later time. The lender would need to clearly document why they were unable to apply for the guarantee with the initial loan due to the coronavirus pandemic situation in their local area.
Given the current uncertainty and extreme volatility of commodity prices, it is difficult to project planning prices for many commodities with a high degree of certainty. Therefore, FSA will continue the use of commodity planning prices already approved for the current year. However, customers must be advised of the potential budget, cash flow, and loan impacts if projected prices are unable to be realized.
Servicing Direct Loans
FSA is extending deadlines for producers to respond to application packages for Primary Loan Servicing and Distressed Loan Servicing. Financially distressed and delinquent direct loan borrowers who have been notified of the available loan servicing options will be provided an additional time to:
- Submit a complete application for loan servicing
- Accept an offer of loan servicing
- Provide a response to a denial of loan servicing
- Request homestead protection
FSA will temporarily suspend loan accelerations, non-judicial foreclosures, and referring foreclosures to the Department of Justice. The U.S. Attorney’s Office will make the determination whether to stop foreclosures and evictions on accounts under its jurisdiction.
Servicing Guaranteed Loans
In addition to the existing guaranteed loan servicing options already available within the FSA guaranteed loan program, FSA is offering lenders additional flexibility. This includes:
- Standard Eligible Lenders (SEL) may certify that they have met all FSA requirements for annual line of credit advances and will not need FSA prior written approval.
- SEL and Certified Lender Program (CLP) lenders may certify that they have met all FSA requirements for emergency advances and will not need FSA prior written approval.
- SEL and CLP lenders may certify that they have a feasible plan for additional loans made outside of the guarantee and will not need FSA prior written approval. Loans made under the Small Business Administration’s new Paycheck Protection Program can be made at the lender’s discretion without FSA approval.
Lenders are also encouraged to submit status and default status reports online through the Lender LINC System. Lenders should contact the FSA office at their local USDA Service Center for questions related to a specific account, or any short-term payment deferral and forbearance consideration.
Through January 31, 2022, FSA’s Disaster Set-Aside provision is available to direct loan borrowers who have been impacted by the pandemic. In addition, FSA will permit a second DSA for COVID-19 and a second DSA for natural disaster for those who had an initial COVID-19 DSA. Requests for a COVID-19 DSA or a second DSA must be received no later than May 1, 2022.
This enables an upcoming annual installment to be set aside for the year and added to the final installment. For annual operating loans, the loan maturity date may be extended up to twelve months in order to set aside the installment.
The DSA provision is normally used in the wake of natural disasters, and a second Disaster Set-Aside may be available for direct loan borrowers who already have a DSA in place on a loan due to another designated natural disaster.