Last week, the U.S. Department of Agriculture (USDA) announced 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.
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.
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