If your farm has been affected by COVID, we want you to know that the USDA is providing loan alternatives.
At Christianson, our mission is to share knowledge to help you succeed. The U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) is reminding producers that FSA offers farm ownership and farm operating loans to agricultural producers who may not find success obtaining loans from their traditional financial institutions because of COVID-19. Farmers who cannot obtain commercial credit from a bank can apply for FSA direct or guaranteed loans. Below you’ll find additional Farm Loan Flexibilities through the USDA.
FSA is relaxing the loan making process and adding flexibilities for servicing direct and guaranteed loans to provide credit to producers in need. This includes:
- For direct loan applicants, FSA provides two notifications of an incomplete application. These notices give the applicant 20 calendar days and 10 calendar days, respectively, to provide the additional information needed before the application is withdrawn. FSA loan officials will maintain close communication with applicants who are experiencing difficulties completing application requirements due to complications from COVID-19 and may grant the applicant an extension.
- Where lien searches cannot be properly completed due to local and state government office closures, applicants may be considered eligible and processing of the loan may continue without a county records search, assuming all other eligibility and loan making criteria can be satisfied.
- Preparing loan closing documents even if FSA is unable to complete lien and record searches because of closed government buildings. Once those searches are complete, FSA would close the loan.
- Closing loans if the required lien position on the primary security is perfected, even for loans that require additional security and those filings and recordings cannot be obtained because of closed government buildings.
- Extending the repayment period of annual operating loans beyond 18 months to help borrowers survive through unique periods of financial difficulty.
- Use of video conferencing to facilitate loan closings, where notary services are not required.
- For guaranteed loans, FSA may grant an extension to guaranteed lenders that are unable to provide a complete application within the normal timeframe because of reasons outside of their control caused by COVID-19. Because each applicant and lender’s circumstances are unique, extensions will be granted on a case-by-case basis.
- If lenders need to extend credit to a customer that would normally require an FSA guarantee, but the lender is unable to apply for a guarantee due to the various pandemic restrictions in place, FSA will be as flexible as possible when evaluating the test for credit if the lender requests a guarantee on that loan at a later time. The lender would need to clearly document why they were unable to apply for the guarantee with the initial loan due to the coronavirus pandemic situation in their local area.
- Where not legally prohibited, FSA will accept FAXed or scanned signatures from customers and lenders.
Given the current uncertainty and extreme volatility of commodity prices, it is difficult to project planning prices for many commodities with a high degree of certainty. Therefore, FSA will continue the use of commodity planning prices already approved for the current year. However, customers must be advised of the potential budget, cash flow, and loan impacts if projected prices are unable to be realized.
Servicing Direct Loans
FSA is extending deadlines for producers to respond to application packages for Primary Loan Servicing and Distressed Loan Servicing. Financially distressed and delinquent direct loan borrowers who have been notified of the available loan servicing options will be provided an additional time to:
- submit a complete application for loan servicing,
- accept an offer of loan servicing,
- provide a response to a denial of loan servicing, or
- request homestead protection.
FSA will temporarily suspend loan accelerations, non-judicial foreclosures, and referring foreclosures to the Department of Justice. The U.S. Attorney’s Office will make the determination whether to stop foreclosures and evictions on accounts under its jurisdiction.
Servicing Guaranteed Loans
In addition to the existing guaranteed loan servicing options already available within the FSA guaranteed loan program, FSA is offering lenders additional flexibility. This includes:
- Standard Eligible Lenders (SEL) may certify that they have met all FSA requirements for annual line of credit advances and will not need FSA prior written approval.
- SEL and Certified Lender Program (CLP) lenders may certify that they have met all FSA requirements for emergency advances and will not need FSA prior written approval.
- SEL and CLP lenders may certify that they have a feasible plan for additional loans made outside of the guarantee and will not need FSA prior written approval. Loans made under the Small Business Administration’s new Paycheck Protection Program can be made at the lender’s discretion without FSA approval.
Lenders are also encouraged to submit status and default status reports online through the Lender LINC System. Lenders should contact the FSA office at their local USDA Service Center for questions related to a specific account, or any short-term payment deferral and forbearance consideration.
Additionally, states have separate funding opportunities, such as Minnesota’s Disaster Recovery Loan Program. If you would like us to help you find funding opportunities appropriate for your business, contact our experts.