USDA is making $1 billion in loan guarantees available “to help rural businesses meet their working capital needs during the coronavirus pandemic,” the department said Thursday.
The guarantees apply to loans disbursed through the Business & Industry CARES Act program. In a Notice of Funding Availability made available Thursday but which has yet to be published in the Federal Register, USDA said funding provided to Rural Development through the Coronavirus Aid, Relief, and Economic Security Act would support approximately $951 million in guarantees.
The new B&I CARES Act program loans “must be used as working capital to prevent, prepare for or respond to the effects of the coronavirus pandemic,” USDA said. “The loans may be used only to support rural businesses, including agricultural producers, that were in operation on Feb. 15.”
The program is available to rural businesses and producers who do not qualify for Farm Service Agency loans.
That means, said National Sustainable Agriculture Coalition senior strategic adviser Ferd Hoefner, that loans will be going out to the “biggest of the big.”
“The ones who do not qualify for FSA are those who do not meet the family farm test (i.e, those that are managed by hired managers, not by the farm family) and those that exceed the FSA guarantee loan limit of $1.776 million,” Hoefner said. “A huge percentage of those will likely be chicken and hog” concentrated animal feeding operations, or CAFOs.
Hoefner also said the inclusion of loans for agricultural production marks “a very dramatic and unusual change,” since USDA, “with very limited exceptions,” cannot use B&I loans for agricultural production.
Lenders who can apply include federal or state-chartered banks, savings and loans, Farm Credit banks, and credit unions.
Entities qualified to receive guaranteed loans include both for-profit businesses and nonprofits, cooperatives, federally recognized tribes, and public bodies.
“USDA intends to consider applications in the order they are received,” the department said. “However, the department may assign priority points to projects if the demand for funds exceeds availability.”
USDA said eligible applicants should contact their local USDA Rural Development state office in the state where the project is located.