On December 8, 2021, USDA announced its latest American Rescue Act funded effort, the Food Supply Chain Guaranteed Loan Program. This program will provide $1 billion in guaranteed loans to “facilitate financing for the start-up or expansion of activities in the middle of the food supply chain, particularly the aggregation, processing, manufacturing, storing, transporting, wholesaling, or distribution of food, to increase capacity and help create a more resilient, diverse, and secure U.S. food supply chain.” USDA outlined three priority outcome goals for this program:
- Catalyzing economic recovery within disadvantaged rural communities impacted by COVID-19 pandemic.
- Ensuring all rural residents are able to equitably access and/or benefit from Rural Development (RD) programs and funded projects.
- Reducing climate pollution and increasing resilience to the impacts of climate change through economic support to rural communities.
Lending organizations that will be eligible to make guaranteed loans through this program include federal and state-chartered banks, savings and loan associations, farm credit banks with direct lending authority, and credit unions. The maximum guaranteed loan amount allowed in this program is $40 million, with a 90% guarantee for fixed interest rate loans, and an 80% guarantee for all other loans. Critically, all applications will be accepted and processed without regard to the availability of credit from any other source.
To that end, USDA has put special priority on lending to entities seeking to establish facilities that increase the regional availability of slaughter and initial processing services for meat and poultry producers, reserving 19% of the allocated loan guarantees for such applications for the next six months. USDA has also instituted safeguards within the program to ensure that funded projects increase overall competition within an ever consolidating meat sector.
This summary guide distills the most relevant details for potential borrowers from multiple published USDA sources and will be updated as new or altered information emerges.
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