USDA logo Building Sustainable Farms, Ranches and Communities

Local Food Enterprise Loans

Loaning funds to support farm and ranch incomes and renew local food system infrastructure and community development

Program Basics
The 2008 Farm Bill created new loan and loan guarantee authority for local and regional food enterprises through the Business and Industry (B&I) Loan program administered by the Rural Development branch of the USDA. While the authority allows USDA to make or guarantee loans, the B&I program currently is entirely federal guarantees of commercial loans.

The purpose of the B&I program in general is to help improve, develop, or finance businesses and employment in rural areas by bolstering the existing private credit market through federal guarantees. The purpose of the local and regional food subprogram is to support farm and ranch incomes as well as the renewal of local food system infrastructure and community development.

Application and Financial Information
Loans can be used to support and establish enterprises that process, distribute, aggregate, store, and market foods produced either in-state or transported less than 400 miles from the origin of the product.

Loans may be used for business conversion, enlargement, modernization, purchase and development of land, buildings, facilities, purchase of equipment, machinery, supplies, inventory, and similar purposes, and may also be used for business acquisitions when the loan will keep a business from closing or prevent the loss of employment or expand job opportunities.

Priority will be given to projects that in some way benefit communities with limited access to affordable and healthy foods and that have a high rate of hunger, food insecurity, or poverty.

The recipient of the loan or loan guarantee is required to inform consumers in some way of the locally- or regionally-produced attribute of the food products. The maximum loan guarantee is 80 percent for loans of $5 million or less, 70 percent for loans between $5 and $10 million, and 60 percent for loans exceeding $10 million. Generally loans to a single borrower are capped at $10 million, though several exceptions apply.

Eligibility, Uses, and Restrictions
Individuals, cooperatives, cooperative organizations, businesses, and other entities are eligible for these loan guarantees.

B&I loans are generally available only in rural areas, which include all areas other than towns of more than 50,000 people and those contiguous or adjacent to urbanized areas. Grants may be made to cooperatives for value-added processing facilities in non-rural areas, provided they service agricultural producers within 80 miles of the facility and help improve producer income.

Website
http://www.rurdev.usda.gov/rbs/busp/b&i_gar.htm

Rural Development State Offices:
www.rurdev.usda.gov/recd_map.html

Contact Information
Carolyn Parker
Director, Business and Industry Division
Phone: (202) 690-4103
carolyn.parker@wdc.usda.gov

Last Updated January 26, 2010

Please note: Building Sustainable Farms, Ranches and Communities is also available for download in PDF format.

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