By Shelby Shank
Field Editor

The U.S. Department of Agriculture (USDA) announced updates to the Farm Service Agency’s (FSA) Farm Loan Programs in a move aimed at improving farm profitability for new and beginning farmers and ranchers.

The modifications are part of the Enhancing Program Access and Delivery for Farm Loans rule and are meant to provide important financing options used by farmers and ranchers 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,” FSA Administrator Zach Ducheneaux said in a news release. “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.”

Policy changes include establishing a new low-interest installment set-aside program for financially distressed borrowers.

Distressed and delinquent borrowers can defer up to one annual loan installment at a reduced interest rate to ease financial stress.

Under the Distressed Borrower Set-Aside program, farmers and ranchers can benefit from low-interest installments without having had to suffer a natural disaster. The program is designed to alleviate financial stress for farms or ranches at risk of bankruptcy, liquidation or foreclosure.

FSA is also lowering the collateral requirement for guaranteed loans, allowing borrowers to leverage more of their equity.

Farmers and ranchers can choose to make interest-only payments in the first year, providing flexible repayment terms that can increase profitability and build working capital reserves and savings.

The American Farm Bureau Federation (AFBF) said the changes announced by FSA follow a conversation the national organization held with Ducheneaux about the importance of USDA loans to young and beginning farmers and ranchers.

“American Farm Bureau welcomes the concept of USDA’s changes, and we look forward to diving into the details of the rule. We will, certainly, provide feedback to the agency on what adjustments, if any, are necessary to make sure farm and ranch families can continue farming,” AFBF President Zippy Duvall said.

FSA also simplified the application process for loans, making it easier for farmers and ranchers to access and complete applications. Additional details on those changes are available from USDA.

The farm loan policy changes will take effect Sept. 25, 2024.