What can you do to avoid Agricultural Loan Delinquencies during this COV-19?

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The ongoing pandemic has swept through the entire world affecting businesses both large and small. Farmers who are just ahead of spring planting have felt the impacts on their farms and in their communities in terms of price volatility, labor shortages, dwindling markets, and so on. The USDA, i.e the US Department of Agriculture has announced important changes to FSA loan programs and federal crop insurance policies which provide farmers impacted by the COVID-19 crisis greater flexibility in paying back bank loans on agricultural land, applying for emergency loans, and completing required crop insurance reporting to USDA.

USDA FSA Service Center Changes

USDA’s farm service agency, i.e, the FSA administers the bulk of USDA’s farm programs including disaster assistance programs, safety net programs, farm loans, and other federal farm programs. FSA staff continue to work and administer these programs right through the crisis. FSA county offices are open by phone appointments and staff is using email and online tools wherever possible to assist farmers. Other USDA county offices including the Natural Resources Conservation Service (NRCS) is also following the same path. Farmers need to contact their crop insurance agent to see how they are communicating and handling business during this time. 

FSA Loans

The FSA announced several important changes to direct and guaranteed farm loans to provide credit more quickly to producers in need. It provides both annual operating loans and ownership loans either directly or through commercial banks. These changes include: 

  • Extending the deadline for applicants to complete farm loan applications
  • Closing loans if the required position on the primary security is perfected even for loans that require additional security. 
  • Continuing to prepare Direct loan documents even if FSA is unable to complete lien and record searches because of closed government buildings. 

FSA is also extending deadlines for farmers to respond to actions such as loan deferrals for financially distressed or delinquent borrowers. FSA will suspend: 

  • Loan accelerations which require loans to be fully due and payable
  • Referring foreclosures to the Department of Justice will show some, but not all farm loan foreclosures
  • Non-judicial foreclosures require FSA to sell whatever the farmer put down as collateral when opening the loan because the borrower cannot pay back their loan.

FSA is also providing private lenders who administer USDA farm loans to self-certify which will allow guaranteed lenders to provide operating loan advances and emergency advances on lines of credit more quickly to farmers with existing guaranteed loans. However, additional actions are needed to speed up the guaranteed loan approval process for newer farm loans. Guaranteed lenders can also request the temporary payment deferrals for borrowers who do not have a feasible plan for repaying their loans due to loss in revenue. 

United Farm Mortgage specializes at the end to end process of procuring land and can help with bank loans on agricultural land. Their services are designed to fit the financial needs that enable you to grow your business in the best possible way.

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