The U.S. Department of Agriculture (USDA) just announced $1.3 billion in debt relief that will go to helping over 36,000 farmers across the country thanks to funds set aside in the Inflation Reduction Act.
Why do farmers need debt relief?
Farmers have been struggling financially for a few reasons. First, prices for their products have been dropping due to global competition. This has led to a decrease in income, which in turn has put pressure on their debt levels, forcing many to use a business debt consolidation loan to help them get by.
Additionally, the farm economy is especially volatile, meaning that prices can go up and down quickly. This makes it hard for farmers to pay off their debt even when prices are high.
Consequently, many farmers have fallen behind on their loan payments and are currently facing foreclosure on their properties.
What does this announcement mean for farmers?
This debt relief will help farmers stabilize their finances and free up more money to invest in their businesses. It will also help them expand their operations and increase production. This could lead to increased income and decreased dependence on borrowed funds, which is a positive development for the entire agricultural industry.
How will the money be used?
The USDA has a plan for how it will divvy up the $1 billion in funding:
- 11,000 farmers will receive a direct loan from the USDA of about $52,000 – $172,000 in guaranteed loan payments, totaling around $600 million.
- 2,100 farm borrowers who have already been foreclosed on and still owe money will receive around $101,000 in help, totaling about $200 million.
- $66 million in aid will go to 7,000 farmers who had COVID-related loan payment delays
- $330 million will go to 1,600 farmers who currently face bankruptcy or foreclosure
- $175 million is set aside for 14,000 financially-distressed farm borrowers facing cash flow problems who need help avoiding missing their loan payments.
- The remaining funds left will be used to “help relax unnecessary loan restrictions and provide further assistance to be announced later.”
How to know if you qualify for debt relief
To qualify for debt relief, you must:
- Be a farmer in the U.S. with a loan issued by the USDA.
- Have been found by the USDA to be a “distressed” borrower and need help staying in business or re-entering farming.
- Have had market disruptions in your business exacerbated by “more frequent, more intense, climate-driven natural disasters.”
Information on how to apply is available via the USDA’s website.
The bottom line
This is good news for farmers who are struggling to pay off their debt. The USDA has allocated $1 billion to help relieve the burden, and it’s hoped that this will help stabilize the agricultural industry and lead to increased production. If you’re a farmer in the United States and think you may qualify for debt relief, don’t hesitate to reach out to your lender or the USDA for more information.