Inflation Reduction Act Assistance for Distressed Borrowers

On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) into law. Section 22006 of the IRA provided $3.1 billion for USDA to provide relief for distressed borrowers with certain Farm Service Agency (FSA) direct and guaranteed loans and to expedite assistance for those whose agricultural operations are at financial risk.   

USDA is implementing this provision with the goals of keeping borrowers farming, removing obstacles that currently prevent many borrowers from returning to their land, and improving the way that USDA approaches borrowing and loan servicing in the long-term.  For many farmers, including those who have been hard hit by pandemic-induced market disruptions exacerbated by more frequent, more intense, climate-driven natural disasters, this assistance is vital if they are to continue producing the food, fiber, and fuel that are essential to the well-being of not only our rural communities but our Nation as a whole. 

This program complements other assistance made possible through the IRA, including producers who experienced discrimination in USDA farm loan programs.

Cash Flow-Based Assistance 

USDA has begun implementing a process to identify whether an operation has sufficient cash flow to make their next scheduled loan payment. Through this procedure, qualifying borrowers can request FSA to cover their next installment due or a recently missed installment. All FSA direct loan borrowers should have received a letter in February 2023 detailing the process for seeking this type of assistance even before they become delinquent.

A reminder letter was mailed to all direct loan borrowers in September 2023 to clarify the assistance criteria.  

The IRA Section 22006 cash flow-based assistance submission period concluded December 31, 2023.

All requests are initially handled by the local FSA Office. All requests submitted prior to the December 31, 2023 deadline will be followed up with a FSA letter regarding the status of the request. 

If you have any questions regarding your request, please contact your FSA County Office Loan Official.

For more information, see the steps in the cash flow-based assistance review process.


Extraordinary Measures Assistance 

In May 2023, USDA sent a letter to all FSA direct loan borrowers detailing a new opportunity to receive assistance if they took extraordinary measures to avoid delinquency between February 28, 2020 and October 18, 2022, such as taking on more debt, selling property, or cashing out retirement accounts. The letter provides the specific types of actions that may qualify for assistance and the documentation needed to receive assistance.

The IRA Section 22006 extraordinary measures assistance submission period concluded December 31, 2023.

All requests submitted prior to the December 31, 2023 deadline will be followed up with a telephone call from member of the IRA Response Team and a FSA letter regarding the status of your request. 

If you received a Notice of Request for Additional Information letter in response for your request for extraordinary measures assistance and you still need to upload additional documentation, a member of the IRA Response Team will be in touch with you regarding secure submission of additional documentation. Please do not submit this documentation via email.

For more information, see the steps in the extraordinary measures assistance review process.


Additional Financial Assistance for Qualifying Guaranteed Farm Loan Borrowers

In August 2023, USDA announced it will begin providing additional, automatic financial assistance for qualifying guaranteed Farm Loan Programs (FLP) borrowers who are facing financial risk.

An FLP guaranteed loan borrower is distressed if they qualify under one of the options below. FLP guaranteed borrowers who qualify under multiple options will receive a payment based on the option that provides the greatest payment amount:  

  • Payment of any outstanding delinquency on all qualifying FLP guaranteed loans as of Oct. 18, 2022. This includes any guaranteed loan borrowers who did not receive an automatic payment in 2022 on that loan because they were not yet 60 days delinquent as of Sept. 30, 2022, as well as guaranteed borrowers that became delinquent on a qualifying FLP guaranteed loan between September 30, 2022, and Oct.18, 2022
  • Payment on a qualifying FLP guaranteed loan for which a guaranteed loan borrower received a loan restructure, which modified the guaranteed loan maturity date, between March 1, 2020, and August 11, 2023. The payment amount will be the lesser of the post-restructure annual installment or the amount required to pay the account in full. The guaranteed loan must not have been paid in full prior to Aug. 11, 2023.
  • Payments on certain deferred amounts on qualifying FLP guaranteed loans, not to exceed $100,000, for guaranteed borrowers who received a deferral or another type of payment extension, for at least 45 days, between March 1, 2020, and September 30, 2022, from their guaranteed lender on that qualifying guaranteed loan in response to COVID-19, disasters, or other revenue shortfalls. The Inflation Reduction Act payment amount will be the lesser of the most recent deferral or extension amount on the qualifying FLP guaranteed loan, or the amount required to pay the account in full. The guaranteed loan must not have been paid in full prior to Aug. 11, 2023.    

This assistance is only available for FLP guaranteed loan borrowers who did not or will not receive an initial payment on the same FLP guaranteed loan under Inflation Reduction Act assistance announced in October 2022. 

FSA will also provide relief to qualifying FLP guaranteed loan borrowers determined to be distressed borrowers based on liability for remaining federal debt subject to debt collection and garnishment after the liquidation of their guaranteed loan account as of July 31, 2023. This will allow some borrowers to potentially return to farming.

Guaranteed borrowers who qualify for this assistance will have their federal debt paid automatically by FSA and will receive a letter informing them of the payment made on their federal debt. 

Previous IRA Assistance

In October 2022, USDA provided approximately $800 million in initial IRA assistance to more than 11,000 delinquent direct and guaranteed borrowers and approximately 2,100 borrowers who had their farms liquidated and still had remaining debt. USDA shared that it would conduct case-by-case reviews of about 1,600 complex cases for potential initial relief payments, including cases of borrowers in foreclosure or bankruptcy. These case-by-case reviews are underway.

USDA also announced that it anticipated payments using separate pandemic relief funding totaling roughly $66 million on over 7,000 direct loans to borrowers who used the USDA Farm Service Agency’s disaster-set-aside option during the COVID-19 pandemic. The majority of these payments have been processed.

In April 2023, USDA offered an additional approximately $130 million in automatic financial assistance for qualifying direct loan borrowers based on the specific circumstances of their direct loans. Eligibility for these new categories of automatic payments included:

  • Assistance to direct loan borrowers who were past due on a qualifying direct loan as of September 30, 2022, but by fewer than 60 days, and remained delinquent on that loan as of March 27, 2023. The assistance will be equal to the amount of the delinquency and the next installment.
  • Assistance to borrowers who restructured a qualifying direct loan on or after February 28, 2020 through primary loan servicing available through FSA. The assistance will be equal to the next installment, not to exceed the remaining balance.
  • Assistance to borrowers whose interest owed on their qualifying direct loan debt exceeds the principal owed (on a loan-by-loan basis). The assistance will equal the pending interest as of March 27, 2023.

Tax Implications

Direct loan borrowers who received Section 22006 assistance in 2022 will soon receive a set of revised tax documents along with a letter explaining the revised forms and notifying the borrower of options that may be available to avoid or alleviate any tax burden incurred as a result of receiving that financial assistance.

USDA cannot provide tax advice and encourages borrowers to consult their own tax professional, but FSA is providing educational materials for borrowers to be aware of the options.

Read frequently asked questions for direct loan borrowers who received Section 22006 assistance in 2022 or see our additional tax resources.

What’s Next 

Improved Procedures and Forthcoming Regulations

FSA is finalizing changes to its policy handbooks to better align with existing statutory guidance on the actual needs of borrowers. These measures are anticipated to include: 

  • Updating FSA procedures to ensure both loan officers and borrowers have the opportunity to compare FSA’s terms with those offered by commercial banks.
  • In cases where banks offer terms that don’t meet the borrowers’ actual needs, updating FSA procedures to ensure that they can access credit through FSA when otherwise eligible.
  • Addressing FSA procedures to offer terms that assist borrowers in the accumulation of working capital reserves.
  • Directing FSA staff to use their discretion to better benefit the borrowers they serve.

USDA continues to work on longer-term assistance and improving the way that USDA approaches borrowing and loan servicing. More information will be posted to this webpage as it becomes available.

Additional Resources 

For more information, contact FSA at your local USDA Service Center or through the FSA call center at 877-508-8364 between 8 a.m. and 7 p.m. Eastern. Additional information can be found here: 

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