U.S. Ag Secretary Tom Vilsack on $500 Million in Loan Guarantees
U.S. Secretary of Agriculture Tom Vilsack appeared on a phone-in press conference out of Bozeman on Monday to introduce a new loan guarantee program that will help expand loan guarantee programs and address bottlenecks in the food supply chain.
“It’s fair to say that the pandemic exposed a number of weaknesses in our food supply chain in need for more support for expanded processing and for helping to improve existing small and very small processing facilities,” said Secretary Vilsack. “I recently announced $500 million of possible new processing capacity which we are in the process of obtaining information, listening to folks as to how best to structure this.”
Secretary Vilsack then announced the new USDA program.
“Today we're announcing the establishment of a loan guarantee program to reduce the risk to bankers and to others who are providing the financing for such things as mobile processing facilities or cold storage capacity being expanded or to producer groups, or establishing a co-op to brand or market their product,” he said.
Vilsack then explained the importance of the loan guarantees to local banks and financial institutions.
“These loan guarantees are important to bankers and those who provide the financing because they may not be as familiar with the risk associated,” he said. “There's a little reluctance on the part of commercial lenders to establish and to provide the credit, but with our loan guarantee, we expect and anticipate that risk to bankers and other financers will come down significantly, and open up credit opportunities for facilities that are pursuing expanded opportunities.”
Vilsack provided more information on institutions that will offer the loans.
“This program is going to be available obviously to those who are approved lenders,” he said. “Most FDIC banks can easily become approved. We’re also opening up this opportunity for Community Development financing Organizations, CDFI’s, looking for ways in which we can expand the number of entities that will potentially be interested in participating potentially in this loan guarantee program.”
Secretary Vilsack said the loan program will also address bottlenecks in the food supply chain created by the pandemic.