The USDA Food Supply Chain Guaranteed Loan Program (FSC) is a loan program designed to support the growth and expansion of food and agricultural businesses in the United States. The program is administered by the U.S. Department of Agriculture (USDA) under its Rural Development initiative. It provides loan guarantees to lenders to encourage them to make loans of up to $40 million to eligible businesses in the food and agricultural sector.
Supporting the Growth & Expansion of America’s Food Supply Chain
The Food Supply Chain Guaranteed Loan Program was created to help meet the growing demand for food and agricultural products in the United States, as well as to support the growth and expansion of businesses that play a critical role in America’s food supply chain. This includes businesses that produce, process, store, or distribute food and agricultural products, as well as businesses that provide support services to these industries including food manufacturing, processing, wholesaling, distributing, storage, transportation, and logistics.
By guaranteeing portions of loans, the USDA helps reduce some of the risks for business lenders, making it more likely that the lender will approve the loan. This makes it easier for eligible businesses to access the financing they need to grow and expand.
Key Benefits of the USDA Food Supply Chain Guaranteed Loan Program
One of the key benefits of the USDA Food Supply Chain Guaranteed Loan Program is that it provides flexible financing options. Loans can be used for a variety of purposes including business acquisition and expansion, business repair and modernization, real estate financing (including the purchase and development of land), working capital, equipment financing, information technology, refinancing, and other business needs.
The program also provides longer repayment terms than many traditional loan options, up to 40 years. Unlike other USDA Rural Development Business Loan Programs, there are NO geographical restrictions (a business does not have to be located in an area designated as “rural” and can be located anywhere), and FSC Loans do not require a USDA Guarantee Fee for the life of the loan. In fact, there is no annual fee requirement, at all.
Interest rates like all USDA Business Loans are extremely competitive, tied to the WSJ Prime Rate + 1-3%. Final rates are set by the individual lender. As is the case with most commercial loans, the better one’s credit, the lower the interest rates that are likely to be offered.
Eligibility for USDA Food Supply Chain Business Loans
To be eligible for a loan through the Food Supply Chain Guaranteed Loan Program, businesses must be engaged in the production, processing, storage, or distribution of food or agricultural products. Borrowers must also have good credit (a minimum score of 680 with good payment history) and be able to provide collateral (tangible assets such as cash, real estate or bonds) valued on a 1:1 basis to the loan amount requested, after discounting by standard industry practices.
How to Apply for a USDA Food Supply Chain Guaranteed Loan
To apply for a loan through the USDA Food Supply Chain Guaranteed Loan Program, businesses will need to work with an approved lender like North Avenue Capital to ensure eligibility. NAC is a direct lender that serves all 50 states and specializes in USDA Commercial Business Loans.
Once initial eligibility has been verified, the borrower will need to complete a loan application that outlines their business plan and financial projections. The proposal should include information about the business, its team members, products or services, target markets, use of funds, growth goals, credit and all required credit and financial information, and appraisals.
Once the loan proposal is submitted, the lender will review the application and make a decision on the loan request. If the loan is approved, the business will need to close the loan by signing loan documents and meeting other requirements set forth by the lender.
It's important to note that the Food Supply Chain Guaranteed Loan Program is just one of several loan programs available through the USDA Rural Development initiative. Other programs, such as the USDA Business & Industry Guaranteed Loan Program, also may also be a good fit for businesses in the food and agricultural sector.
The Food Supply Chain Guaranteed Loan Program is a valuable resource for businesses in the food and agricultural sector that are looking to grow and expand. By backing certain portions of commercial loans made by participating lenders, the USDA makes it easier for businesses to access the financing they need to support their growth and success. If you are a business owner in the food or agricultural sector, it is worth considering the Food Supply Chain Guaranteed Loan Program as a source of financing for your business.
North Avenue Capital can help you pre-qualify for USDA Food Supply Chain Loan to ensure that you meet initial eligibility criteria and that your time is used most efficiently. NAC’s team includes USDA Food Supply Chain Loan specialists, serving clients nationwide. Contact us for assistance in applying for a USDA commercial loan, today.