Congressman Sanford Bishop

Representing the 2nd District of Georgia

FY2022 House Appropriations Requests

Debt Relief for Black and Minority Farmers

The American Rescue Plan (ARP) contains historic provisions for farm loan assistance and USDA support for farmers of color during the COVID-19 crisis. This bill was signed into law on March 11th, and we are awaiting details from USDA on how they will implement the provisions. In the meantime, it is important to know what the law says, so I have compiled a list of answers to frequently asked questions to help in that regard.

*Please note that this is not intended to be the sole resource for farmers of color impacted by the COVID-19 outbreak.
 

FAQs on Section 1005 of the American Rescue Plan (ARP)

Debt Relief for Black and Minority Farmers

 

The American Rescue Plan (ARP) contains historic provisions for farm loan assistance and USDA support for farmers of color during the COVID-19 crisis. This bill was signed into law on March 11th and, while USDA has released some details, we do not yet know when USDA will implement the provisions. In the meantime, it is important to know what the law says, so I have compiled a list of answers to frequently asked questions to help in that regard.

 

*Please note that this is not intended to be the sole resource for farmers of color impacted by the COVID-19 outbreak.

 

FAQs on the American Rescue Plan (ARP) Debt Relief – Section 1005
 

Q: What are the provisions related to black and minority farmers?

Section 1005 provides debt relief for eligible USDA farm loans and Section 1006 directs $1.01 billion to allow the Secretary of Agriculture to provide training, technical assistance and other assistance to black farmers and other farmers of color. Also eligible under that billion-dollar pot of funding are community-based organizations that work with farmers of color, the 1890 and 1994 Land Grants, and other minority serving institutions.

Q: Who is eligible for debt relief under section 1005 of the ARP?

Socially disadvantaged farmers and ranchers – as defined in the Food, Agriculture, Conservation, and Trade Act of 1990 – are eligible for debt relief if they have existing Farm Service Agency (FSA) farm loan debt.

Section 2501 of the Food, Agriculture, Conservation, and Trade Act of 1990 defines “socially disadvantaged farmers and ranchers” as those who are one or more of the following: Black, American Indian/Alaska Native, Hispanic, Asian, and Hawaiian/Pacific Islander. These are farmers or ranchers who have been subjected to racial or ethnic prejudice because of their identity as members of a group without regard to their individual qualities.

For information regarding eligibility for co-borrowers/entity members, visit USDA’s website or contact their Call Center on weekdays from 8 a.m. – 7 p.m. ET. Call 877-508-8364, then select “American Rescue Plan”.

Q: What loans are eligible for debt payments under section 1005 of the ARP?

Debt relief in the ARP agriculture section is only for USDA Farm Service Agency (FSA) direct and guaranteed farm loan debts as of January 1, 2021. It does not address “non-Federal” debt unless it is an FSA guaranteed loan with a commercial bank or Farm Credit System institution.

Eligible loans include:

  1. Direct loans by FSA, including Farm Storage Facility Loans, Direct Farm Ownership Loans, Farm Operating Loans (this includes Microloans and Youth Loans), Emergency Loans, Conservation Loans, and Soil and Water Loans; and
  2. Guaranteed loans by FSA and made by an approved lender, including Farm Ownership Loans, Farm Operating Loans, and Conservation Loans.

Both delinquent and current loans are eligible. Debts associated with these types of loans that have been referred for offset or collection are also eligible.

Q: I had a direct or guaranteed FSA farm loan in the past but lost the farm and do not have current debt. Am I eligible for relief?

If you do not have a current farm loan, you are not eligible for debt relief under Section 1005. However, you may be eligible to benefit from assistance provided in Section 1006 of the ARP. USDA is actively working to establish a process to assist former borrowers that are socially disadvantaged based on race and ethnicity. Details will be shared as soon as a process is established.

Q: Are my FSA Direct, Guaranteed, or Farm Storage Facility Loans obtained after January 1, 2021, eligible?

No. Only loans made and advanced as of January 1, 2021 are eligible.

Q: Are all USDA direct and guaranteed loans and debts eligible?

No. Rural Development loans, FSA Marketing Assistance Loans, debts associated with other USDA programs, and non-USDA federal debts are not eligible.

Q: I have a farm loan through a Farm Credit System institution or local bank. Is my loan covered under Section 1005 of ARP?

No. Loans from commercial lenders such as banks, credit unions or Farm Credit institutions are not eligible, unless the loan is an FSA guaranteed loan.

Q: How much will my farm receive in debt relief payments under section 1005 of the ARP?

Up to 120 percent of outstanding indebtedness on all eligible farm loans has been authorized for debt relief. The amount is based on what was owed as of January 1, 2021. Loan payments received from borrowers after January 1, 2021 will not reduce the amount of the American Rescue Plan debt payment from FSA. Your debt payment will be reviewed with you prior to final processing. After debt obligations to the USDA or guaranteed lender are paid off, amounts remaining are provided to the farmer or rancher to account for the potential tax liabilities of the debt relief.

Q: How soon will my farm receive debt relief under section 1005 of the ARP? When will debt payments be made?

USDA Farm Service Agency (FSA) has said that they are currently compiling and analyzing balances for all eligible loans and also determining the quickest and most efficient way to make payments. Once the payment process is finalized, they plan to explain that payment process and provide it in writing to all farm storage facility loan, direct loan, and guaranteed loan borrowers. Your debt payment amount will be reviewed with you prior to final processing.

In addition, USDA is working to set up the outreach and financial training necessary to help farmers understand the tax implication of the debt relief. You are encouraged to check USDA’s website regularly at farmers.gov/AmericanRescuePlan for updates on both the debt payments and financial training.

Q: Do I need a third party to help me access this loan assistance? Is there a fee charged by USDA to participate in the debt relief?

There is no fee to participate. FSA employees will assist borrowers with their questions free of charge and will help producers complete any required documents. You do not need a third party to access this assistance and can work directly with USDA.

USDA plans to collaborate with community-based organizations and universities on outreach and technical assistance to black and minority farmers, providing borrowers with access to financial, legal, and tax planning services using the resources provided in Section 1006 of ARP. USDA will compensate these official partners, but borrowers should NOT pay a fee.

If you are approached by someone seeking a payment or if it seems like a scam, please share this information with USDA to investigate.

Q: Do I need to apply or take any action to receive a debt payment?

No action on your part is needed right now. If you’re uncertain of your demographic designation on file at FSA, you can contact your local USDA service center to verify your classification on record. If an update or correction is needed, you may update your record, including race and ethnicity.

You have several options, which right now all include the USDA Form AD-2047:

  • Call your local USDA service center and inform them that you’d like to fill out the form over the phone.
  • Download and print form AD-2047, sign it and mail or deliver it to your local USDA Service Center.

Q: Will USDA require that I prove my U.S. citizenship?

No additional information will be required with regards to U.S. citizenship or immigration status. FSA loans are available to U.S. citizens and certain legal residents according to federal law. USDA has said that this information was verified when the loan was originally made and does not need to be repeated.

Q: I have loan payments that are coming due. What should I do?

• For FSA Direct Loans, borrowers should make all regularly scheduled payments or apply for a COVID-related Disaster Set-Aside of payments.
• For Farm Storage Facility Loans, borrowers should make all regularly scheduled payments.
• For FSA Guaranteed Loans, borrowers should make all regularly scheduled payments as agreed to with your lender.

Your debt relief payment will be calculated based on the amount you owed on January 1, 2021. USDA is encouraging lenders to be flexible and has issued guidance, as of January 26, 2021, to help lenders understand available flexibilities.

Q:  My loan is delinquent, and I was notified that foreclosure or liquidation proceeding was starting.  What do I need to do to prevent foreclosure?

FSA has suspended all foreclosure, debt collection and other adverse actions for direct loans during the pandemic and has encouraged lenders with guaranteed loans to follow suit. FSA is in the process of gathering information on all such loans from lenders. If you have a guaranteed loan and a lender has indicated plans to continue with foreclosure or liquidation, contact your local USDA service center so that FSA is made aware and may intervene.

Q: Are farmers disqualified from taking advantage of USDA farm loans in the future if they receive debt relief under section 1005 of the ARP?

Debt relief would not affect the eligibility of farmers or ranchers for future farm loans.

Q: How many producers in my state will receive debt relief under section 1005 of the ARP?

You can contact USDA Congressional Relations to learn the estimated number of impacted borrowers in your state.

Q: Why is the debt relief only going to farmers of color?

Decades-long discrimination against farmers and ranchers of color by the USDA in its administration of farm loan programs and other safety net programs is well-documented, and we still see the effects of that discrimination today.

The inability to access resources from USDA was only made worse by the COVID-19 pandemic. Section 1005 is tailored to provide relief for farmers and ranchers with outstanding USDA FSA indebtedness.

Below are two documents from Jonathan Coppess with the Department of Agricultural and Consumer Economics at the University of Illinois which provide additional information:

https://farmdocdaily.illinois.edu/2021/03/reviewing-the-history-and-development-of-usdas-farm-loan-programs-part-1-origins.html

https://farmdocdaily.illinois.edu/2021/03/reviewing-the-history-and-development-of-usda-farm-loans-part-2-1937-to-1946.html

Q: Are there any similar programs for borrowers who are not socially disadvantaged based on race and ethnicity?

This American Rescue Plan program is for socially disadvantaged borrowers. FSA offers a range of other support programs available, including assistance provided in response to the pandemic, Disaster Set-Aside and Primary Loan Servicing. If you are facing an economic hardship, please contact your local USDA service center.

Q: How is the debt relief for Socially Disadvantaged farmers related to COVID?

This pandemic did not affect all farmers and ranchers the same way. Due to longstanding discriminatory practices by the USDA, farmers of color have not had equal access to credit and other USDA safety net programs and are at risk of losing their farm due to the pandemic.

Data from USDA shows a disproportionate percentage of the $50 billion in Federal payments to agricultural producers to offset the effects of COVID-19 and the trade war went to white farmers.

Q: How much money will be spent on debt relief for socially disadvantaged farmers under section 1005 of the ARP?

The CBO estimates that providing farm loan assistance under section 1005 would cost $4 billion.

Q: I heard there’s a billion-dollar pot of funding for black and minority farmers?

Below is a summary of Section 1006 of the American Rescue Plan (ARP):

Provides $1.01 billion to the Secretary for assistance to socially disadvantaged farmers, ranchers, and forest landowners who have historically faced discrimination by USDA, with such assistance provided directly to producers and through community-based organizations, land-grant universities, other minority serving institutions of higher learning. These funds will support:

- Outreach, financial training, cooperative development and capacity building, and other technical assistance to socially disadvantaged groups;
- Grants and loans to improve land access, including heirs’ property issues, and aid former farm loan borrowers that suffered adverse actions or past discrimination or bias;
- The creation and activities of equity commissions; and,
- Research, education, and extension activities at minority serving institutions, including scholarships, internships, and pathways to Federal employment for students; eligible institutions include 1890 Land-Grant Institutions, 1994 Tribal Land-Grant Colleges and Universities, Alaska Native/Native Hawaiian Serving Institutions, Hispanic-Serving Institutions, and Insular Area Institutions

Q: How can constituents have input into how the Section 1006 funding is spent?

We do not have direction from USDA on how Secretary Vilsack intends to proceed with funding the priorities spelled out under Section 1006 at this point, but this could be a topic for a town hall or listening session with constituents or a request for ideas from individuals and groups in your district.
 

If you need further information or resources about other COVID-19 relief, please see our COVID-19 Resource page  which will be updated periodically.

If you are a Black or Minority farmer in Georgia and you would like to be added to our ListServ to receive updates on the different relief resources that are available to you, please complete the form below.