Searching High and Low for that Best Loan! 1-888-822-0844

USDA Cold Storage Refinancing

The refinance of cold storage facilities can be a big boost to businesses that deal with the food and agriculture sector. These refinances can be well taken care of through the USDA Business & Industry (B&I) loans. These loans enable businesses to enhance their infrastructure, cut expenses and boost productivity.

by | Jun 10, 2024

How to Refinance Your Cold Storage with USDA Business & Industry Loans

Process for Farm Storage Facility Loans

The refinance of cold storage facilities can be a big boost to businesses that deal with the food and agriculture sector. These refinances can be well taken care of through the USDA Business & Industry (B&I) loans. These loans enable businesses to enhance their infrastructure, cut expenses and boost productivity.

Currently, cold storage warehousing is on the rise. The Global Cold Chain Alliance estimated that the market value of global cold storage is expected to be $372 billion by 2029, with an annual compound growth rate of 10.3 %.

When cold storage facilities are refinanced through USDA Business & Industry (B&I) loans, it is extremely beneficial for businesses that usually have to cope with expensive conventional loans. These loans have several advantages, such as low interest rates, longer repayment periods, and cash flow improvement.

Benefits of USDA B&I Financing for Cold Storage

SBA Financing Agricultural Processing

The following are the advantages of USDA B&I loan refinancing for refrigerated and frozen foods.

These are the benefits of refinancing with USDA B&I loans for the improvement of the financial status and the productivity of cold storage facilities.

Lower Interest Rates

The first advantage of refinancing with USDA B&I loans is lower interest rates on the borrowed sum. Generally, conventional loans have higher interest rates and this simply means that one ends up paying more for the borrowed funds. USDA B&I loans are less expensive than the other loans in the market.

For instance, consider a cold storage facility that has a traditional loan of $1 million with an interest rate of 7%. The interest on this loan is paid once a year and it stands at $70,000. Thus, refinancing this loan with a USDA B&I loan at a 4% interest rate would decrease the annual interest payment to $40,000. 

This leads to a saving of $30,000 every year which can be used in other parts of the business.

Extended Repayment Terms

USDA B&I loans also provide longer repayment periods than regular loans. While there are conventional loans with a term of 10-15 years, USDA loans can be for up to 30 years. Longer terms result in lower monthly payments and this helps in increasing cash flow and financial position.

Let us consider the same $1 million loan. If it is initially set up with a 10-year term at a 7% interest rate, then the monthly payment would be about $11,610. Refinancing to a USDA B&I loan with a 30-year term at an interest rate of 4% would lower the monthly payment to around $4,774.

This is because the business will be paying almost $6,836 less every month, which will help the business have more cash flow to be used in operations or business expansion.

Improved Cash Flow

Benefits of Opting for ABL Loans

Improved cash flow is a major advantage of refinancing with the help of USDA B&I loans. Lower interest rates and longer repayment periods decrease the monthly instalment payments of the debt, which releases funds that can be used elsewhere.

For instance, refrigerated warehouses previously paying $11,610 per month (as per the 10-year, 7% loan example) would be saving, $6,836 monthly by refinancing at 4% for 30 years. This extra cash can be used to buy new and better refrigeration units, purchase energy-efficient equipment and technologies or even hire new workers. This way, having better cash flow management, the business can function more effectively and meet market challenges.

Access to Additional Funds

Refinancing with USDA B&I loans can also enable one to secure more funds. Companies can use such funds for several objectives such as building improvements, machinery acquisitions, or development projects.

Suppose a cold storage facility requires $500,000 to purchase new refrigeration facilities. By refinancing the current $1 million loan with a new USDA B&I loan and adding the $500,000, the business can access a new loan of $1. 5 million.

If this new loan is to be given at 4% interest over a time of 30 years then the monthly payment would be estimated to be $7,165. This still remains a far cry from the initial $11,610 that was to be paid every month even with the extra money being remitted.

Collateral Flexibility

With USDA B&I loans, there is usually more leniency as far as collateral is concerned compared to other loans. This is especially helpful for companies which have their assets locked in existing loans.

USDA B & I lending can help a cold storage facility use its real estate, equipment, or other collateral more effectively by refinancing. For instance, if the facility has a real estate of $2 million and the current debt is $1 million then the business might be in a position to use the full value of its real estate if it opts to refinance with the help of a USDA loan. This can lead to receiving better loan terms and lower interest rates as a result.

Details of the Loan and the Interest Rates 

USDA for Cold Storage Financing Programs

As B&I loans from the USDA, they have great features. The interest rates are reasonable and may be either a fixed or a floating rate. For example, a standard fixed rate could be at 5% while for variable rates, it could start from as low as 4%.

The loan durations range from 30 years for real estate and 7 years for working capital. This flexibility enables the loan to be customized according to the business’s requirements.

Also, USDA loans do not attract prepayment penalties. This means that businesses can redeem their loans and not be charged extra for doing so.

Qualification Requirements

Before a business can be approved for a USDA B&I loan there are certain conditions that it must meet. The business that the organization aims to support must be located in a rural region, based on the USDA’s classification of rural, which includes any area with a population of less than 50,000.

The business must also prove its capacity to repay the loan in case the loan is availed. This includes demonstrating prior earnings and offering expectations for future earnings. Usually, a business’s tangible net worth must be not less than 10% of the loan amount.

Another condition is that the business has to produce collateral. This could include for instance property, machines, or any other property. The collateral value has to be equivalent to the loan amount hence making the loan secured.

Allowed Use Cases

Farm Storage USDA Loans

USDA B&I loans are versatile; they can be utilized in a number of ways. A cold storage business can take a new loan to pay off other loans, and thus enjoy a lower interest rate and better cash flow. For instance, when a company refinance a $1 million loan from a 7 % interest rate to a 4 % interest rate, this will result in a reduction in interest costs of $30,000 per year.

Such loans can also be taken to buy new equipment. A new compressor, or replacing the entire refrigeration unit or increasing storage space may lead to increased efficiency and less cost to be incurred.

Also, USDA loans are not limited to the mere establishment of facilities; they can be used to expand facilities with a view to enhancing storage capacity and meeting increased demand.

Also, USDA loans can help to meet the capital requirements of the business. This entails aspects such as wages, goods and other general running costs of the business to ensure that it is effectively managed.

Application Process

Here is a step-by-step guide of the application process for USDA B&I loans. First, the businesses have to approach a USDA approved lender. This lender will assist them in the application process and assist in the acquisition of required paperwork.

Next, businesses need to come up with an elaborate business plan and goals and how they want to use the funding. 

The entrepreneur should submit financial statements, projections and a detailed description of the business and its activities. This plan helps the USDA in order to determine the feasibility of the loan.

After that, the application is submitted to the USDA for processing, which may take a few weeks. If approved, the business will receive the loan amount, which can be used for the intended purpose.

Understanding Account-Based Loans - ABL Loans


USDA B&I loans can be used for refinancing cold storage facilities’ current debt and enhancing their business to benefit rural regions. Due to their reasonable interest rates, favorable terms, and numerous uses, these loans can enable companies to flourish in a rapidly expanding field.

Flaney Capital is a reliable partner for businesses using to leverage USDA B&I loans and SBA loans for refinancing cold storage loans. Contact us to learn more.  Call 1-888-822-0844. 


Watch Our Videos

Are you ready to take your business to new heights? Discover the power of the SBA Business Industry Program. With its comprehensive eligibility criteria, underwriting requirements, and loan guarantees, this program provides accessible and affordable loan options for businesses in rural areas.

Video Link



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.