The regional administrator of the Small Business Administration says a new agency initiative is focused on boosting food production in the United States, particularly meat processing.
Brad Zaun, a former member of the Iowa Senate, is the S-B-A’s administrator for Iowa, Missouri, Kansas and Nebraska. “We don’t believe there’s enough competition in the meatpacking industry and that includes poultry,” Zaun said, “and that is one of the reasons we’ve got this special program.”
To encourage banks to make loans to food processors and related businesses, the SBA will be guaranteeing a larger portion of one of these loans if the business defaults. “Typically we have anywhere from a 60-75% guarantee,” Zaun said. “This raises it to 90% and what it does is the liability for the lenders is so much less they’re probably more likely to loan that money out.”
A major regional beef processing plant in Lexington, Nebraska, closed early this year, shutting down nearly 5% of daily cattle processing in the United States. Zaun has been meeting with businesses in the region to tout the new SBA loan guarantee, in hopes of expanding processing capacity. “Smaller, mom-and-pop type places or a little bit larger facilities,” Zaun said, “and we’re going out and trying to deploy more cash at a 90% loan guarantee.”
The program is not just for food processors, but for businesses all along the food chain. Zaun said that means grocery stores could be eligible for the program “because there are so many areas that don’t have good grocery stores or any kind of service like that.”
Businesses may begin applying for these loans May 1. Last year, the Small Business Administration backed loans to 85,000 U.S. businesses.