More farmers may be seeking USDA Farm Service Agency direct and guaranteed loans this winter because of the financial situations they find themselves in due to multiple years of high input costs, low commodity prices and adverse weather conditions.

For that reason, they need to be aware that FSA administrators have launched several new programs aimed at improving the lending process, including a Farm Loan Assistance Tool designed to help guide them through USDA’s lending programs.

“USDA recognizes more must be done to ensure customers have equal access to our programs and services,” FSA Administrator Zach Ducheneaux said. “The Loan Assistance Tool is another example of USDA taking accountability and ensuring we update our existing systems, processes and policies to make them equitable for all customers.”

Ducheneaux said the Farm Loan Assistance Tool will help loan applicants “better understand the application process and gather the needed information and documentation before the process begins.”

USDA experiences a high rate of incomplete or withdrawn applications, particularly among underserved customers, due, in part, to a historically challenging and lengthy paper-based application process, he noted

Assistance tool

The online Loan Assistance Tool is available 24/7 and gives customers an online step-by-step guide that supplements the support they receive when working in person with a USDA employee, providing materials that may help an applicant prepare their loan application in one tool.

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Farmers can access the Loan Assistance Tool by visiting farmers.gov/farm-loan-assistance-tool and clicking the ‘Get Started’ button. From here they can follow the prompts to complete the Eligibility Self-Assessment and start the farm loan journey. The tool is built to run on browsers like Chrome, Edge, Firefox or Safari and is fully functional on mobile devices. It does not work in Internet Explorer. 

Ducheneaux said the Loan Assistance Tool is the first of multiple farm loan process improvements that will be available to USDA customers on farmers.gov in the future. Other improvements and tools that are anticipated to launch in 2025 include:

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USDA currently provides credit to 115,000 producers who cannot obtain sufficient credit from commercial lenders by giving them access to direct and guaranteed Farm Service Agency farm loans.

“With the funds and direction Congress provided in Section 22006 of the Inflation Reduction Act of 2022, USDA is taking action to immediately provide relief to qualifying distressed borrowers whose operations are at financial risk,” a USDA spokesman said.

“That’s while we’re working on making transformational changes to loan servicing so that borrowers are provided the flexibility and opportunities needed to address the inherent risks and unpredictability associated with agricultural operations.”

Additional funding

Besides the initial $800 million to make direct loan borrowers current on their payments in October of 2022, USDA made an additional $250 million in automatic payments for distressed direct and guaranteed borrowers under Section 22006 on Oct. 7 of last year. All told, USDA has provided $2.4 billion in assistance to more than 43,000 distressed borrowers under Section 22007.

“The payments announced today help to assure that more than 4,600 producers across the country will see another production season,” said Ducheneaux in announcing the $250 million of Section 22006 funding. “Importantly, we’re not only addressing current crises. We’re also creating a more resilient and supportive loan system for the future.”

He said USDA and FSA have additional initiatives underway to streamline and automate the Farm Loan customer-facing process including the Farm Loan Assistance Tool. Others are:

“USDA encourages producers to reach out to their local FSA farm loan staff to ensure they fully understand the wide range of loan and servicing options available to assist with starting, expanding or maintaining their operation,” Ducheneaux said.

As this is being written, Congress had not passed a new farm bill or an extension of the 2018 farm law, putting passage of much-needed assistance for farmers in doubt and making USDA’s new borrowing tools more important than ever.