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June 21, 2022   /   K. Lee Graham

The USDA committed $1 Billion in financing aid to businesses that package, transport, store, and/or distribute food products in America. The new Food Supply Chain Guaranteed Loan Program will especially support processors of the meat, poultry, and dairy products in increasingly short supply.

Learn more about the program’s financing for food supply chain businesses and how you could reap big benefits for your middle of the food supply chain business.

Financing for the Food Supply Chain’s Top Problems

The food supply chain was hit hard by COVID-19, and it’s still recovering. From labor shortages to rising fuel costs and increased industry consolidation, it’s become harder and harder for small to medium-sized businesses to compete in the industry. These challenges make it even more difficult and expensive to get food from rural farms to family dining rooms across the country.

The USDA announced the Food Supply Chain Guaranteed Loan Program to offer some relief to American businesses and to the consumers who depend on them. As a business involved in the US food supply chain, you can use this financing to make big improvements to your operations while benefitting from reasonable and entrepreneur-friendly loan terms.  

Here’s how you could use the Food Supply Chain Guaranteed Loan Program funds to grow, expand, and improve your businesses:

snowflake representing cold storage food supply chain loan

Expand cold storage facilities to increase capacity

Purchase and develop new real estate

Purchase new trucks to grow your fleet

Purchase and develop new real estate

Hire and train new employees

Install more efficient equipment and machinery

Invest in new technology systems and software

Access working capital

How Your Business Benefits from the Food Supply Chain Guaranteed Loan Program

The USDA Food Supply Chain Guaranteed Loan program helps small to medium-sized businesses along the food supply chain access affordable capital to grow. Compared to conventional loans, government guaranteed loan programs like this one typically come with longer loan terms, lower (or no) fees, and more flexibility for using the money.

The entrepreneur-friendly benefits were created in the spirit of the USDA: to make financing more accessible and attainable for those who need it most.

Longer Repayment Periods

A longer repayment period means you can make smaller payments month to month than if you were financing with a shorter-term loan. This puts potentially more capital in your hands month to month to use for your business.

You’ll hear banks say that loan programs like the USDA Food Supply Chain Loan Program offer long-term, patient capital. This simply means that, on average, you have more years to pay back the loan than conventional loans give you.

No Guarantee Fees

There are no upfront fees for the USDA Food Supply Chain Guaranteed Loan Program. This is a rare perk for a loan that is government guaranteed.

Loan programs like this one typically require extensive processing done by your lender and its team. Once you submit your documents, the underwriting team ensures every detail satisfies the strict requirements you need to meet to access your affordable capital.

Guarantee fees are typically an unavoidable part of applying to a desirable loan program like this one. The fee goes towards that labor-intensive underwriting process which helps you secure a loan with better terms and benefits.

However, the Food Supply Chain Guaranteed Loan Program is unique among government-guaranteed loans because there are no guarantee fees. You’ll reap the benefits of a guaranteed loan without the closing costs.

Flexible Use of Proceeds

How would you improve your business if you had extra capital in your hands?

The Food Supply Chain Guaranteed Loan Program’s mission is to help you capitalize on opportunities that would grow your business by providing reasonable financing to do so.

With its flexible use of proceeds, this loan program allows you to finance a number of projects related to growing, expanding, or improving your business.  

The list above of how entrepreneurs are using this loan is just a starting point, but the way you use your USDA loan can be largely up to you. 

Eligibility for Food Supply Chain Guaranteed Loan Program Benefits

Farmers and growers are not eligible, and neither are grocery stores that sell to consumers. All the businesses in between could be eligible. Essentially, anyone between the food producer and the retail seller could qualify for this program. Financing is only available for these middle-of-the-chain businesses.

This category includes any businesses that currently or will aggregate, process, manufacture, store, transport, wholesale, or distribute food.

Additionally, your business needs to meet the USDA’s basic criteria:

  • Be a legal, operational entity.
  • Be a part of the foods supply chain system at a commercial level
  • Meet food safety & labeling standards in full compliance with the USDA Food Safety & Inspection Service, FDA, and their state.

The loan program guidelines emphasize that its focus is on the meat, poultry, and dairy-related industries, however, it does not exclude any food industries.

You can read more about specific eligibility requirements for the Food Supply Chain Guaranteed Loan Program here, or check your eligibility by filling out the form below:

Check Your Eligibility for the Food Supply Chain Loan Program

Step 1 of 6

How will you use the funds?(Required)

The Food Supply Chain Guaranteed Loan program is only available until the allocated funds run out.  Interested business owners should apply as early as possible to increase their chances of receiving funding. Have questions about the program and whether or not it’s right for your business goals? Our USDA lending team is here to help. Contact us to schedule a meeting or phone call with one of our Food Supply Chain financing experts.

About West Town Bank & Trust | As a top rural USDA lender, our mission is to help American businesses access the capital they need to grow. During each of the previous five fiscal years, West Town Bank & Trust has ranked as a top 10 USDA B&I and REAP lender in the country by total dollar volume, authorizing nearly $400 million in financing.