The Agriculture Department expects to start providing debt relief early next month for minority farmers who hold direct USDA loans.

On Friday, the department’s Farm Service Agency released the first notice of funding availability announcing loan payments for eligible borrowers with qualifying direct farm loans. The notice will be published in the Federal Register early next week.

“A subsequent notice addressing guaranteed loan balances and direct loans that no longer have collateral and have been previously referred to the Department of Treasury for debt collection for offset, will be published within 120 days,” the department said.

The $1.9 trillion American Rescue Plan enacted in March required USDA to make payments worth 120% of the qualifying farmers' indebtedness and included $4 billion for that purpose. The payments are intended to both pay off the loans and to cover the related taxes and fees.

The payments will be broken into two steps, USDA said, including a 20% direct deposit for taxes and fees, and then loan payment from Treasury to USDA to clear the debt.

“The American Rescue Plan has made it possible for USDA to deliver historic debt relief to socially disadvantaged farmers and ranchers beginning in June,” Agriculture Secretary Tom Vilsack said. “USDA is recommitting itself to gaining the trust and confidence of America’s farmers and ranchers using a new set of tools provided in the American Rescue Plan to increase opportunity, advance equity and address systemic discrimination in USDA programs.”

Under the law, Black, Latino or Hispanic, Native American or Alaskan Native, and Asian American or Pacific Islander producers are eligible for the payments. About 85% of the approximately 16,000 qualifying loans affected are direct loans.

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“For much of the history of the USDA, socially disadvantaged farmers and ranchers have faced discrimination — sometimes overt and sometimes through deeply embedded rules and policies — that have prevented them from achieving as much as their counterparts who do not face these documented acts of discrimination,” USDA said.

Over the past three decades, USDA said “several major civil rights lawsuits have compensated farmers for specific acts of discrimination,” but added that “those settlements and other related actions did not address the systemic and cumulative impacts of discrimination over a number of decades that the American Rescue Plan now begins to address.

The NOFA defines "eligible recipient" as "an individual or entity" that is:

  • "A borrower or co-borrower on FSA eligible direct loans on January 1, 2021; all eligible direct loan borrowers are included in this initial announcement except those who no longer have collateral or an active farming operation and whose loan has been previously referred to the Department of Treasury for debt collection for offset; and
  • "A member of a socially disadvantaged group as reflected on FSA records at the time a payment is made. For entities and married couples, at least one individual personally liable as a borrower or co-borrower for the debt must be a member of a socially disadvantaged group; or
  • "An estate of a deceased eligible recipient."

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