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USDA B&I Loans Boosting Meat Processing Industry

The loans offered under the Business and Industry (B&I) program of the USDA are very instrumental in the development of the industry. These loans offer much-needed capital that enables the processors of meat and other related products to expand their operations, improve plant infrastructure and increase production capability. The USDA has the goal of sustaining rural economic growth and maintaining the integrity of the food supply chain through these financial tools.

by | Jun 13, 2024

USDA B&I Loans Boosting Meat Processing Industry

Understanding Loan-to-Value Ratio in ABL

The loans offered under the Business and Industry (B&I) program of the USDA are very instrumental in the development of the industry. These loans offer much-needed capital that enables the processors of meat and other related products to expand their operations, improve plant infrastructure and increase production capability. The USDA has the goal of sustaining rural economic growth and maintaining the integrity of the food supply chain through these financial tools.

Another advantage of USDA B&I loans is that they cost less than other conventional financing methods due to lower rates of interest. This has helped meat processing companies to easily finance new technologies and equipment. Moreover, the longer periods for repayment are less straining on the businesses’ finances on a monthly basis, leaving room for investment in other operations.

The USDA has reported that many meat processing businesses have benefited from these loans, hence growth in the sector. Specifically, for the last five years, the program’s B&I loans totaled over $500 million to meat processors. This financial support has created thousands of employment opportunities as well as developed numerous facilities in the country.

Expansion and Modernization of Facilities

PhotoReal USDA Meat Processing Business Loan Options 3

The USDA rural development is important in the development and growth of meat processing facilities; hence high quality beef. Such loans provide organizations an opportunity to improve their structures, thus increasing effectiveness and effectiveness. For instance, most processors have embraced new technologies of automations that enhance operations while at the same time cutting on the cost of labor.

It also results in better food safety and quality since new and well-equipped facilities are developed. B&I loans have a great potential of helping meat processors in putting in place modern hygiene and inspection facilities. 

This guarantees that the products are safe for use from the standpoints of the leading regulatory bodies, and enhances confidence among consumers in the market.

Dr. James Peterson, an expert in the meat processing sector, says that “USDA B&I loans are revolutionary for the sector. These are the leg up mostly required for the companies to start expanding further. Without such loans, many middle scale processors may have difficulty meeting the growing demand from consumers.”

Employment Opportunity and Economic Benefits

B&I loans have not only positive effects on the operations of these meat processing facilities, but also on other points in the economy. They help create employment opportunities for the people of rural areas and thus contribute to their economy. 

Since these loans assist the meat processors to grow and upscale their production, it results in creating employment opportunities for both skilled and unskilled persons.

The United States Department of Agriculture has analyzed that every $ 1 million spent on meat processing through B&I loans generates about 30 job opportunities. In the last ten years, it has amounted to tens of thousands of new jobs promotion of rural regions and stable work opportunities for individuals.

There is also a multiplier effect of the meat processing industry on other sectors that support it directly or indirectly. It is a win-win situation for suppliers, transporters, and retailers as their activities increase. This leads to a chain reaction of influencing economic growth and development of rural areas.

Supporting SMEs

Benefits of Opting for ABL Loans

The B&I loans offered by USDA are priceless when it comes to SMEs in meat processing. Such enterprises are almost always constrained in their access to conventional financing due to their size and risk. This is where USDA loans come in, to help SMEs gain access to the required capital to compete with large businesses.

It is evident that by supporting SMEs, the USDA B&I loans foster Diversity and competition within the meat processing business. This helps consumers gain better prices and choices in the market for the products they need. Moreover, smaller processors also tend to target particular segments which provide products that may fit the specific needs of consumers in a particular market.

As per financial expert Sarah Collins, “USDA B&I loans bring equity to the small & medium-sized meat processors so they are able to expand their businesses efficiently. This not just helps the business but also gives a boost to the entire industry.”

Enhancing Export Capabilities

Another area where USDA B&I loans are useful is in developing the export capabilities of meat processors. These loans enable companies to address the necessary expenditures to meet the international markets’ requirements through infrastructure and certifications.

This creates new markets for processed meat products and enhances the competitiveness of processed meat products from the USA in the global market.

Over the decade, there has been a significant rise in exports of meat in the United States based on the meat processing industry. According to USDA data, figures of meat exports have risen to more than $18 billion per annum in the last five years, an increment of over 20 percent. Part of this growth is credited on the back of B&I loans which have enhanced the capacities and efficiencies.

It is evident that international markets require quality as well as safe meat products. In this case, USDA B&I loans assist processors in meeting these requirements through financing enhancements in the processing methods, packaging, and distribution channels. This makes it possible for the U. S. to be a major source of meat products in the global markets.

USDA B&I Loans Terms and Rates 

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USDA Business and Industry (B&I) loans have more relaxed loan structures that can be advantageous to the meat processing businesses. Real estate loans have a variable maximum of 30 years, giving business sufficient time to meet their obligation and repay the debt. Equipment financing can go up to a maximum of 15 years while working capital financing can go up to a maximum of 7 years.

The long terms that the USDA provides ease the monthly financial pressure on the meat processors. For instance, a $ 1 million loan for real estate at an interest rate of 3% over 30 years leads to approximately $ 4,216 per month. 

For the same amount of money and interest rate, if this loan is taken for a shorter period of time, then the monthly payment is a lot higher and puts a lot of pressure on the cash flows of the company.

Interest Rates

Another advantage of USDA B&I loans is their relatively low interest rates. These rates are usually lower than those offered for conventional financing. For example, interest rates on USDA B&I loans start at 3 % while those of commercial loans are pegged between 5% and 8%.

Lower interest rates mean big savings over the life of the loan. Suppose you borrowed $500 000 for 15 years at an interest rate of 3%. The total interest expense would be approximately $125,000. If the same loan had an annual interest rate of 6%, the total interest costs would be about $258,000. This is why USDA B&I loans are much cheaper for meat processors.

Eligibility Requirements

Factoring vs Tangible Assets

The eligibility criteria for USDA B&I loan is aimed at making sure that the benefits are only available to those that are intended, such as rural businesses and populations. 

To be eligible to participate in the program, the meat processing businesses need to be situated in rural areas and the definition of a rural area is an area that has a population of less than fifty thousand. In the same respect, the business must show its capacity to repay the loan as well as offer security that is enough for it.

Business Size and Type

The B&I loans are offered to all types of businesses such as corporations, partnerships, and co-operatives, and federally recognized tribes. The company must fit the USDA criteria, which roughly resemble the criteria of the Small Business Administration. For instance, the meat processing plant that has less than 500 workers is likely to be eligible for the scheme.

Use of Funds

USDA B&I loans may be spent on several activities that are of immense importance to a meat processor. Some of these are the acquisition of property, development of other property, repair and lease of property, acquisition of equipment, and financing of working capital. This is helpful because it enables meat processors to utilize the loan funds where they will prove most beneficial, whether it be for buying inventory, equipment or otherwise.

Guarantee and Fees

The USDA B&I loans are supported by the USDA guarantee that can go up to 80% of the loan amount for any loan that does not exceed $5 million. This guarantee helps to minimize risks for lenders, making them more likely to provide financing. The guarantee for loans of between $5m and $10m is 70% while for loans that are more than $10m the guarantee is 60%.

There are also charges that come with USDA B&I loans. The first cost is the guarantee fee usually amounting to 3% of the guaranteed amount of the loan and the annual renewal fee of 0.55 percent of that guarantee amount. These fees are insignificant as compared to the advantages of securing a low interest and long term loan.

PhotoReal USDA Loan Guide for Meat Manufacturing Businesses 4


USDA B&I loans provide an effective means to spur development of business in meat processing. Due to low interest charges, longer period of repayment, and versatility of usage, there is enormous potential for meat processors in these loans.

We invite you to cooperate with Flaney Capital to obtain the necessary funds for the further development of your business. Our knowledge of USDA B&I loans will enable you to secure low interest long term funding that fits your specific needs to the letter. Call us now to grow your business and reach all your fiscal objectives. Call us at 1-888-822-0844.

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Here are some answers to Frequently Asked Questions.

What are the main advantages of ABL loans?
ABL loans allow companies to use their existing assets as collateral for financing, providing greater flexibility than traditional lending methods.
Are there any risks associated with ABL loans?
Yes, if a business cannot repay its loan, the lender may seize the assets used as collateral. Businesses need to understand this risk before opting for an ABL loan.
How does accounts receivable factoring work for ABL loans?
In accounts receivable factoring within the context of ABL loans, a business sells its outstanding invoices (accounts receivable) at a discount to obtain immediate cash.
What is involved in the due diligence process for obtaining an ABL loan?
The due diligence process typically involves assessing a company’s financial health, including reviewing its balance sheet, income statement, and cash flow statement, among other things.
Can all types of companies apply for an ABL loan?
While any company can apply for an ABL loan, it is particularly beneficial for those with a high volume of accounts receivable or significant tangible assets.