USDA says it will guarantee $1 billion in loans for rural businesses and farmers hurt by pandemic

The U.S. Department of Agriculture "said Thursday it would provide up to $1 billion in loan guarantees to help rural businesses and farmers meet their working capital needs during the pandemic . . . with money from the $2 trillion coronavirus relief package," Chuck Abbott reports for Successful Farming. "The new program is patterned on USDA’s existing Business and Industry program but with a higher loan guarantee level and lower requirements for collateral. Loan guarantees assure lenders that the government will pay off a loan if the borrower cannot." No maximum loan size was specified.

"The changes also allow the USDA to provide 90 percent guarantees on B&I CARES Act Program loans, set the application guarantee at 2% of the loan, accept appraisals completed within two years of the loan application date, not require discounting of collateral for working capital loans and extend the maximum term for working capital loans to 10 years," Daniel Uria reports for UPI. "The loans can only be used by rural businesses, including farmers, that were operating as of Feb. 15."

"Separately, the Farm Service Agency said it would broaden the use of its disaster set-aside loan provision so that it applies to the coronavirus," Abbott reports. "The provision allows the USDA to delay the payment date on a loan held by a farmer."