Editor's note: This article is part 3 in a special 3-part series examining how the Inflation Reduction Act will impact agriculture and funding opportunities that may result for farmers. The series highlights conservation provisions included in the bill, rural development, energy and other agriculture-related provisions, as well as ag credit and technical assistance.

In a move to aid distressed farm loan borrowers, the Inflation Reduction Act (IRA) allocates nearly $6 billion in funding to help producers avoid foreclosure and get back on their feet financially. This financial assistance replaces the provisions initially established by the American Rescue Plan Act of 2021. The funds are available until the end of fiscal year 2031.

Approximately $3.1 billion has been appropriated to provide immediate relief to at-risk borrowers in the Farm Service Agency (FSA) farm loan programs. These funds will be used for payments and the cost of loans or loan modifications for distressed borrowers of direct or guaranteed loans administered by the FSA. Congress has also allocated $125 million for technical and other forms of assistance by the U.S. Department of Agriculture.

As of May, the USDA has already commenced the distribution of nearly $1.5 billion to aid more than 20,000 distressed borrowers, incorporating both automatic and case-by-case assistance.

“Through the Inflation Reduction Act, Congress directed the USDA to deliver financial assistance to distressed farm loan borrowers as quickly as possible, and that is what we are delivering to help producers across the country stay on their land,” said Agriculture Secretary Tom Vilsack. “Our goal is to make sure we provide producers access to the tools they need to help get back to a financially viable path and ultimately succeed as thriving agricultural businesses.”

Borrowers who received these automatic payments include FSA direct loan borrowers whose interest exceeded principle owed on outstanding debts; borrowers who had a balance up to 60 days past due as of Sept. 30, 2022 and remained delinquent; and borrowers with a recent restructure between Feb. 28, 2020 through March 27, 2023, or who had accepted an offer to restructure on or before March 27, 2023, but had not yet closed that restructure.

Individual applications

The FSA is also beginning a process to review individual assistance requests from direct loan borrowers who missed a recent installment or are unable to make their next scheduled installment.

All FSA borrowers should have received a letter detailing the process for seeking this type of assistance before they become delinquent. Borrowers who are within two months of their next installment may seek a cashflow analysis from FSA using a recent balance sheet and operating plan to determine their eligibility.

FSA borrowers may also be eligible to receive assistance if they took certain extraordinary measures to avoid delinquency on their loans, such as taking on or refinancing more debt, selling property or cashing out retirement or college savings accounts.

Another provision in the Inflation Reduction Act designates $2.2 billion in financial assistance for farmers, ranchers and forest landowners who have experienced discrimination in USDA lending programs prior to Jan. 1, 2021.

The USDA said it will continue to update borrowers and the public about new eligibility criteria as it learns more about the types of situations financially distressed farmers are facing.

To learn more about how the Inflation Reduction Act will impact agriculture, check out the Iowa Farm Bureau Spokesman's special series, along with resources available through American Farm Bureau and USDA.