CHICAGO, March 26 (Reuters) - Farmers financially hurt by coronavirus will have an easier time getting federal loans after the U.S. Department of Agriculture announced on Thursday it will relax its loan process.
USDA’s Farm Service Agency (FSA) said it also is extending deadlines for producers to deal with loans, including allowing financially troubled or delinquent farmers to be considered for loan deferral.
As the rural sector struggles with volatile commodity prices, trade war woes, extreme weather patterns and now the spreading coronavirus pandemic, U.S. farmers have become increasingly reliant on the FSA for loan assistance. Agricultural lenders, too, are turning to the agency to help guarantee the loans they are issuing to farmers - whether for operational or real estate needs.
“We recognize that farm loans are critical for annual operating and family living expenses, emergency needs and cash flow through times like this,” FSA Administrator Richard Fordyce said in a statement. “FSA is working to find and use every option and flexibility to provide producers with credit options and other program benefits.”
The FSA’s Farm Loan Programs currently are servicing or guaranteeing to cover operating costs, purchase or refinance farm property, and cover emergency loans for 16,999 borrowers for a total of nearly $3.4 billion, according to USDA data as of March 23.
Such loan guarantees and direct loans through USDA FSA are often considered loans of last resort, say bankers and economists.
Without such financial supports, some farmers will struggle to survive until the next cash injection - which should be arriving now - and without the guarantees, some banks say they cannot take on the risk of lending to financially troubled producers or younger farmers with limited assets to leverage.
For banks that offer farm loans guaranteed by USDA, the agency said it would simplify the process for such lenders to offer farmers the ability to get an advance on their operating loans or obtain an emergency line of credit.
USDA also said it will temporarily halt loan accelerations, non-judicial foreclosures and referring foreclosures to the Department of Justice for loans that have failed. However, the agency said, it will be up to the regional U.S. Attorney’s Offices ultimately to determine whether to stop those foreclosures and evictions. (Reporting by P.J. Huffstutter; Editing by Lisa Shumaker)