Fair Credit for Farmers Act

Summary#

The Fair Credit for Farmers Act makes changes to farm loan rules, loan servicing, collateral, and appeals for Farm Service Agency (FSA) programs. Key changes in the bill text include:

  • Payment deferment and interest: The Secretary of Agriculture must defer principal and interest payments on direct farm loans for eligible borrowers for 2 years, extend the loan repayment period by 2 years, and set the interest rate on remaining principal at 0.125% during that 2-year deferment. Loans with terms of 12 months or less are excluded. The Secretary may extend some statutory maximum repayment periods by up to 2 years.

  • Fee waivers for certain borrowers: Lenders must waive guaranteed-loan guarantee fees for covered producers (limited-resource, socially disadvantaged, beginning, and veteran farmers and ranchers) for at least 2 years, with a possible 180-day extension.

  • Loan program and eligibility reforms: The bill adds a new farmer program loan reform section requiring clear reasons and references in adverse determination letters; it limits use of a borrower’s principal residence as collateral (principal residence is a last resort and partial releases are required when other assets cover the loan); it removes a restriction that limited eligibility after prior debt write-downs or losses; and it prevents imposing a limit on how many years a borrower may close a loan. It also requires at least 1 year of farm management experience to get a direct farm ownership loan, but allows waivers for qualified beginning farmers who have mentoring or equivalent education/experience.

  • Refinancing: The bill allows refinancing with farm ownership loans under certain limits (no more than 4 prior uses to refinance) and allows refinancing with operating loans.

  • Equitable relief and appeals: The bill expands when applicants can get equitable relief, allows National Appeals Division (NAD) hearing officers to grant equitable relief (subject to Secretary review), and requires determination letters to state reasons and regulatory references. It also amends NAD procedures so that for appellants with adjusted gross income at or below $300,000 (single year or 5‑year average), the agency bears the burden of proving by substantial evidence that its adverse decision was not erroneous. The implementing agency must use the information the Division used for a final determination without requiring extra information to implement it.

What it means for you#

  • Farmers and ranchers who are "eligible borrowers" (those delinquent or financially distressed) may get a 2-year deferment of direct loan payments, lower interest during that period, and longer repayment timelines.
  • "Covered producers" (limited-resource, socially disadvantaged, beginning, and veteran farmers) may see guarantee fees waived on guaranteed loans for at least 2 years.
  • Borrowers will have added protections around the use of a principal residence as loan collateral and automatic partial release rules when other assets fully secure the loan.
  • Beginning farmers may access ownership loans after 1 year of farm experience, and some may get waivers if they have approved mentoring or other qualifying experience/education.
  • Applicants who receive adverse FSA decisions get more detailed determination letters describing reasons and regulatory references; some applicants harmed by agency errors may be eligible for equitable relief.
  • Appellants under certain income thresholds may face a different burden of proof in NAD appeals: the agency must prove its decision was not erroneous.
  • Lenders who make guaranteed loans to covered producers must waive guarantee fees during the covered period.

Expenses#

No publicly available information on total cost estimates or budgetary effects is included in the bill text or provided metadata. The bill would change program rules that could affect federal program receipts and repayments, including by:

  • Deferring payments and lowering interest on direct loans for 2 years.
  • Waiving guarantee fees for covered producers for at least 2 years.
  • Extending loan maturities and permitting additional repayment time in some cases.
  • Changing refinancing rules and program eligibility rules.

The bill text does not include numerical cost or savings estimates.

Proponents' View#

No publicly available information.

Opponents' View#

No publicly available information.