Interest Under USDA Prompt Payment Act Mean Only One Year!
Jan 23, 2014
We were informed of a farmer that had a several year delay in receiving his 2010-1012 FSA direct payments. Many farmers naturally assume that if the USDA is late in making payments to a farmer, interest will be paid from the original due date until the final payment date. This is true, however, only if that time period is less than one year. If the period exceeds one year, the Prompt Payment Act as it applies to the USDA direct payment program and it appears most if not all of the other programs has a one year limit on the payment of interest.
Therefore, if you are waiting to be paid by the USDA for direct or other payments and the delay is more than six months, it pays to put a burr under their saddle and get it resolved. If it goes beyond a year, then you may be out of luck on getting all the interest you may think you are owed.
The current USDA interest rate under this program is 2.125% as of January 1, 2014 to June 30, 2014. It was lowest in the first six months of last year at a whopping 1.375% and peaked at 15.5% in 1982 (even I still remember those high interest rate years, there may be some young farmers that have never paid double-digit interest rates). Here is a link to the rates paid since the start of the Prompt Payment Act.
Here is a link to the USDA Sugar Loan program showing on page 1-10 that the interest shall be limited to one year.