The Inflation Reduction Act (IRA), signed by President Biden in August 2022, aims to tackle inflation by injecting money into the market. As part of this act, “Discrimination Financial Assistance” will be provided to farmers, ranchers, and forest landowners who have faced loan discrimination prior to January 1, 2021, due to their race, gender, sexual orientation, or other categories. The USDA has a long-standing history of discrimination in its lending process. The act provides a total of $2.2 billion for these claims, with a maximum of $500k available per claim.
While the act is a positive step towards addressing discrimination, there are expected to be many questions regarding the approval process. For instance, what qualifies as discrimination and who is eligible for financial assistance? The approval process is also expected to be lengthy and involve an extensive review of evidence and documentation related to discrimination.
Discrimination can take various forms that may be covered by Discrimination Financial Assistance. Proving discrimination may require indirect financial proof and an examination of the conduct, actions, or decisions of a loan officer. Some examples of evidence that may indicate discrimination include:
- Loan denials based on a person’s race, sex, gender, political affiliation, or other characteristic, especially if the denial is made in favor of someone the loan officer knew or preferred.
- Unfair loan terms or changes that stop cash flow, such as changes that were not approved by the borrower or that were not communicated to the applicant.
- Deferred or delayed loans that cause the applicant to miss a harvest season or otherwise harm their farming operation.
- Excessive collateral requirements that are unreasonable or discouraging to the applicant.
- Insistence on loan officer involvement that interferes with the farmer’s rights.
Other forms of discrimination that harm farmers may also be covered by the IRA. In general, discrimination may occur when a person is discouraged from applying or when thorough information about available options is not provided.
To be eligible for Discrimination Financial Assistance under the IRA, the discrimination must have occurred specifically in relation to USDA farm lending programs. Eligibility depends on the loan type and where the discrimination occurred:
- Direct FSA Farm Loans: discrimination in connection with these types of loans creates eligibility for assistance.
- Non-Farm Loans at USDA: discrimination in USDA programs that do not involve farm loans does not create eligibility.
- Discrimination by a private lender for an FSA-guaranteed loan: this creates liability. It is likely that discrimination by the private lender alone (not the FSA) will also qualify.
- Non-FSA Guaranteed Private Loans: discrimination on non-FSA guaranteed loans generally does not qualify for Discrimination Financial Assistance.
Determining eligibility for Discrimination Financial Assistance can be challenging, and consulting with a skilled attorney can help evaluate your legal rights and how to proceed with a claim.
The Discrimination Financial Assistance program under the IRA has a total of $2.2 billion set aside, with a maximum of $500k per claim. However, there are concerns about whether the allocated funds will be sufficient to assist all those who need it. Congress may allocate additional funds, but this is not guaranteed.
Funding for the program must be used by September 31, 2031, so it is important not to delay in filing a claim. Waiting too long may result in the funds being exhausted before the deadline, leaving you without assistance. Therefore, it is crucial to seek legal advice and guidance as soon as possible to determine if you qualify and to take action before it is too late.
Contact a Discrimination Attorney
If you or a loved one have faced discrimination related to a USDA farm loan, you may be eligible for financial relief under the Inflation Reduction Act. To learn more about your legal rights and options regarding financial assistance, contact Wright & Schulte today 1-800-399-0795 to schedule a free consultation.
The Act covers discrimination based on race, gender, sexual orientation, and other categories, and it is possible that additional categories may be added. Eligibility requirements may become clearer as the program progresses, so it’s best to consult with a lawyer if you have questions. For a free, no obligation legal evaluation of your case, fill out the online form, or give Wright & Schulte a call, toll-free, at 1-800-399-0795.