The Department of Agriculture’s Rural Development Business and Industry Loan Guarantees have seen increasing participation from lenders funding projects in rural America, but the funding for the program is lagging behind its demand.
The popular B&I loan program offers 80% loan guarantees to fund projects in rural America such as business conversions or modernizations, hospitality businesses such as new hotels, or recreational facilities.
Some $2.6 billion of B&I loans were made in the 2021 fiscal year. In FY 22, only $1.25 billion was authorized by Congress, even though the House voted for $2 billion, and the White House and Senate Appropriations Committee had proposed $1.5 billion.
With congressional approval, USDA responded to the shortfall by using budgetary authority to move an additional $520 million worth of loan authority into B&I. As a result, $1.75 billion of loans were approved in FY22.
A continuing resolution that has been funding the government since fiscal 2023 started Oct. 1 provides $699 million for the program. Some $488 million is already obligated to loans with final approval.
Interested in more coverage and insights? Receive a free month of Agri-Pulse!
However, there is a backlog of $816 million. At the current pace, FY23 will generate $2.9 billion in loan demand. Barring changes in the omnibus bill Congress is expected to consider before adjourning for the year, Broydrick & Associates principal Bill Broydrick is expecting “an even bigger backlog” in fiscal 2023.
Speaking last week to rural lenders, USDA Undersecretary for Rural Development Xochitl Torres Small said USDA’s “ability to compensate for an overwhelming interest in the B&I program is dramatically decreasing."
Two years ago, RD looked through “every couch cushion” to find funds that weren’t expended, she said. Last year, the agency did an interchange and utilized the payback from loans and reinvested it back into the program with Congressional approval. Last year, the agency did an interchange and utilized the payback from loansand reinvested it back into the program with Congressional approval.
For more news, visit www.Agri-Pulse.com.
