ICBA called on the USDA to ensure lenders are compensated for lost income as it prepares to pay off direct and guaranteed farm loans held by Socially Disadvantaged Farmers and Ranchers.
Background: Section 1005 of the American Rescue Plan Act requires the USDA to pay off such loans in existence as of Jan. 1, 2021, by providing up to 120 percent of the outstanding indebtedness for each SDA borrower. The USDA is establishing a process for these loan payments.
Impact: In a letter, ICBA said the abrupt payoff of guaranteed loans could have adverse consequences unless the USDA minimizes disruptions to lenders participating in its guaranteed loan programs or acting as secondary market purchasers.
ICBA Position: In addition to making lenders whole, ICBA also said purchasers of USDA loan guarantees should be paid for lost premium values. Further, the USDA could consider assuming the payments of loans that are not delinquent and have not been associated with previous legal challenges, ICBA said.