USDA Introduces Expanded Food Supply Chain Loan Program (USDA FSC) | North Avenue Capital

There is exciting news for businesses operating in the U.S. Food Supply Chain sector. The U.S. Department of Agriculture recently expanded its OneRD Guarantee Loan initiative by putting more money – $1 Billion in loan guarantees – into its new USDA Food Supply Chain Loan Program (USDA FSC). As America’s USDA Business & Industry Loan direct lender, North Avenue Capital (NAC) is pleased to have already begun lending under this new program. Even better, unlike other USDA OneRD-related loan plans, a rural location is not required to qualify for strategic, affordable financing through this terrific new initiative. This is the first of its kind within the USDA overarching program.

The Food Supply Chain Guaranteed Loan Program is a part of the USDA’s larger Build Back Better initiative to help strengthen the food system, following critical supply chain disruptions that resulted from the COVID-19 pandemic.

The new effort will help strengthen the food system by supporting new investments in infrastructure for food aggregation, processing, manufacturing, storage, transportation, wholesaling and distribution, specifically for the start-up or expansion of activities in the middle of the food supply chain.

The hope is that this will create new market opportunities, increasing capacity and supporting a more diverse, resilient and secure U.S. food supply chain. Like other USDA programs, it also hoped that it will help save and/or create new good-paying jobs and benefit the overall well-being of communities, including those that may have been left behind; although, again, there are no specific geographic constraints like other OneRD programs. Metro and rural operations, small and large, are eligible and welcome.

What kinds of businesses can apply for a USDA Food Supply Chain (FSC) Loan?

    • Food Supply Chain Entrepreneurs
    • Meat, Poultry & Fish Processors
    • Food Storage Facilities
    • Cold Storage Facilities
    • Food Packagers
    • Food Wholesalers
    • Food Distributors
    • Food Transporters
    • For-profit businesses
    • Non-profit businesses
    • Existing businesses
    • New Businesses / Start-ups
    • Individuals, partnerships and co-ops
    • Publicly traded companies
    • Federally recognized Native American tribes
    • … and many more!

What are the loan amounts for the new USDA FSC program?

Unlike several other USDA OneRD loan programs, loan amounts for the USDA FSC program can go up to as much as $40 million per borrower. This exceeds maximum loan amounts for the USDA Business & Industry and USDA Rural Energy for America programs. 

What are the loan terms for the USDA FSC program?

Loan terms established by the lender are based upon the specific use of the loan funds and useful economic life of the assets being financed. Loan terms can extend up to 40 years. This is, again, a differentiator between the USDA Business & Industry Loan Program and the USDA Rural Energy for America Program.

What is a major selling factor?

The USDA FSC Loan is the first of its kind to not require a USDA Guarantee Fee for the life of the loan. There is no guarantee or annual fee required.

How can USDA FSC guaranteed loan funds be used?

USDA FSC Loans are very similar to other OneRD programs. Food supply chain businesses can use the funds for:

    • Business launch
    • Business expansion
    • Business repair
    • Business modernization
    • Business conversion
    • Business development
    • Purchase and development of land for commercial or industrial purposes
    • Purchase and development of buildings & infrastructure for commercial or industrial use
    • Building or equipping of facilities for lease to public or private enterprises engaged in commercial or industrial operations
    • Purchase and installation of machinery and equipment, including manufacturing and Information Technology (IT) systems

FSC Loans cannot be used for lines of credit or for full loan refinance.

What kind of credit do I need to get a USDA FSC Loan? Do I need collateral?

USDA FSC Loans, like other OneRD Guaranteed lending programs, are collateral-backed loans for credit-worthy borrowers. Eligibility requirements, however, are quite reasonable and not overly restrictive. Borrowers should have a good credit history with a minimum credit score of 680 and good payment history.

Collateral (cash, real estate or other tangible assets set at a discounted value consistent with sound loan-to-value practices) is required at an amount equivalent to the loan amount.

If you are a business owner or entrepreneur working in or planning to launch a new business in the food supply chain industry, who needs access to capital to help give people greater access to healthy food and eliminate food supply chain bottlenecks, then contact North Avenue Capital. We have offices in Northeast Florida, Arkansas, Georgia, Tennessee and Texas and partners for USDA loans in all 50 states. We can help you learn more about the USDA’s new FSC Loan program.