Subsidy for payments and loan deferment for rural development loans

(a)

Definition of secretary

In this section, the term Secretary means the Secretary of Agriculture.(b)

Subsidy for certain loan payments

(1)

Definition of covered loan

In this subsection, the term covered loan means—(A)a business and industry guaranteed loan under section 310B(g) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1932(g)), other than such a loan guaranteed using amounts made available for the Rural Business Program Account by title I of division B of the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116–136);(B)a community facility guaranteed loan under section 306(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1926(a)); and(C)a community facility direct loan under section 306(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1926(a)).(2)

Principal and interest payments

(A)

In general

The Secretary shall pay the principal, interest, and any associated fees that are owed on a covered loan in a regular servicing status—(i)with respect to a covered loan made before the date of enactment of this Act and not on deferment, for the 6-month period beginning with the next payment due on the covered loan;(ii)with respect to a covered loan made before the date of enactment of this Act and on deferment, for the 6-month period beginning with the next payment due on the covered loan after the deferment period; and(iii)with respect to a covered loan made during the period beginning on the date of enactment of this Act and ending on the date that is 6 months after that date of enactment, for the 6-month period beginning with the first payment due on the covered loan.(B)

Timing of payment

The Secretary shall begin making payments under subparagraph (A) on a covered loan not later than 30 days after the date on which the first payment described in that subparagraph is due.(C)

Application of payment

Any payment made by the Secretary under subparagraph (A) shall be applied to the covered loan such that the borrower is relieved of the obligation to pay that amount.(3)

Other requirements

The Secretary shall—(A)communicate and coordinate with the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and State bank regulators to encourage those entities to not require lenders to increase their reserves on account of receiving payments made by the Secretary under paragraph (2);(B)waive statutory limits on maximum loan maturities for any covered loan durations where the lender provides a deferral and extends the maturity of covered loans during the 1-year period following the date of enactment of this Act; and(C)when necessary to provide more time because of the potential of higher volumes, travel restrictions, and the inability to access some properties during the COVID–19 pandemic, extend lender site visit requirements to—(i)not more than 60 days (which may be extended at the discretion of the Secretary) after the occurrence of an adverse event, other than a payment default, causing a loan to be classified as in liquidation; and(ii)not more than 90 days after a payment default.(4)

Effect

Nothing in this section limits the authority of the Secretary to make payments pursuant to paragraph (2) with respect to a covered loan solely because the covered loan has been sold in the secondary market.(c)

Subsidy for other loan payments

(1)

Definition of covered loan

In this subsection, the term covered loan means a rural development loan made or guaranteed by the Secretary, other than a loan described in subparagraph (A), (B), or (C) of subsection (b)(1).(2)

Principal and interest payments

The Secretary shall pay the principal, interest, and fees, for a borrower of a covered loan the application of which is approved under paragraph (4)(B)—(A)with respect to a covered loan made before the date of enactment of this Act and not otherwise on deferment, for the 6-month period beginning with the next payment due on the covered loan;(B)with respect to a covered loan made before the date of enactment of this Act and otherwise on deferment, for the 6-month period beginning with the next payment due on the covered loan after the deferment period; and(C)with respect to a covered loan made during the period beginning on the date of enactment of this Act and ending on the date that is 6 months after that date of enactment, for the 6-month period beginning with the first payment due on the covered loan.(3)

Loans held by other lenders

In the case of a covered loan held by a lender that is not the Secretary, the Secretary shall require the lender to provide the complete payment deferment relief described in paragraph (2).(4)

Applications

(A)

In general

A borrower seeking payment subsidies under paragraph (2) or (3) shall submit to the Secretary an application in such manner and containing such information as the Secretary may require.(B)

Determinations

The Secretary shall approve an application submitted under subparagraph (A) by a borrower that, as determined by the Secretary and demonstrated in the application—(i)is unable to make payments on a covered loan because of a temporary cash flow disruption due to the COVID–19 pandemic; and(ii)makes a good faith certification that the current economic conditions have made payment deferment relief necessary.(5)

Secondary market

With respect to a covered loan that is sold on the secondary market, if an investor declines to approve a deferral requested by a lender under paragraph (3), the Secretary shall exercise the authority to purchase the covered loan so that the borrower may receive a deferral under this subsection.(6)

Guidance

Not later than 30 days after the date of enactment of this Act, the Secretary shall provide guidance on the deferment process described in this subsection.(d)

Waiver authority

(1)

In general

The Secretary may waive any requirement that a borrower of a covered loan reduce or eliminate a debt reserve established by the borrower, as a condition of granting a loan deferment under this section.(2)

Conditions

The Secretary may provide such a waiver—(A)when a borrower is seeking deferment as the result of an inability to make payments on a covered loan (as defined in subsection (b)(1) because of a temporary cash flow disruption due to the COVID–19 pandemic, if paying down a reserve established by the borrower for debt servicing poses a threat to the continuing financial stability of the borrower; and(B)under other conditions as the Secretary may deem necessary.