In December 2021, the USDA announced the Food Supply Chain Guaranteed (FSC) Loan Program, which guaranteed loans up to $40 million for qualified businesses in both food processing and supply infrastructure. The program, intended to address food system challenges that date back decades and were further exacerbated by the COVID-19 pandemic, has helped eliminate bottlenecks in the food supply chain.
Greater Commercial Lending successfully navigated several clients and projects through the USDA FSC program. This included an innovative project in Alaska with Northline Seafoods. You can see the entire case study here.
Unfortunately, as the FSC program was part of COVID-19 relief packages, its funding was cut in the debt ceiling bill (H.R. 3746, “Fiscal Responsibility Act of 2023”) in June 2023, resulting in the end of the program.
But there’s still good news for businesses with capital needs that might have been a fit for an FSC loan!
And that comes in the form of the USDA Business & Industry (B&I) Loan Guarantee program. Many potential FSC projects could still be eligible for B&I loans – however, there are a couple of key differences between the two loan programs.
Here’s what to keep in mind as you consider funding from the USDA B&I program.
Rural vs. Urban: Under the Food Supply Chain loan program, borrowers were not confined to rural areas – eligible businesses in urban areas were also allowed to participate. B&I loan projects, on the other hand, are limited to rural communities, which are defined as areas with less than 50,000 inhabitants.
Lower loan cap: The USDA set an FSC guaranteed loan cap of $40 million for businesses that fit the eligibility requirements. B&I loans have a lower cap of $25 million per loan.
There’s also another option – some businesses might be a better fit for a loan through the U.S. Small Business Administration (SBA).
SBA 7(a) loans can be used to start or acquire a business, buy inventory and equipment, obtain working capital or refinance debt. 7(a) loans can be up to $5 million with a 50-85% guarantee by the SBA – and they don’t have the rural requirement of USDA B&I loans. For borrowers with a need for capital fast, 7(a) Express loans have an application response time within 36 hours and access to funds within 90 days. These loans can be up to $500,000.
Despite the end of the FSC program, there are still options for government-guaranteed financing through USDA B&I loans and SBA loans. And at GCL, we know how to help worthy businesses secure funding. We also know what loan programs are right for you at any stage of growth. We’ll get you the working capital you need to operate efficiently, create new jobs and support your community.
If you’re interested in learning more about B&I loans or SBA loans, send us a note here.