USDA Puts 90-Day Pause on Loan Guarantees for CEA Projects
Photo: Bowery Farming
The USDA has announced a 90-day pause on “the acceptance, processing, and awarding of loan note guarantees” for the Rural Business Cooperative Service (RBCS) on projects involving biodigester and CEA, including “vertical farming, hydroponics, aeroponics, and aquaponics.”
The RBCS administers grant and loan programs authorized under the Consolidated Farm and Rural Development Act to “support rural business development, agricultural innovation, and energy-related infrastructure.” Its guaranteed loan programs are intended “to promote long-term economic viability while ensuring responsible stewardship of federal funds.”
The Purpose of the 90-Day Pause on Loan Guarantees
The RBCS feels that its current loan programs are in need of examination to “ensure that current program administration appropriately accounts for financial, operational, and market risks associated with such projects.”
During the 90-day pause, the USDA will be conducting a review of its existing portfolio of related projects, including assessing:
- Delinquency rates
- Operational sustainability
- Project performance
- Underwriting guidelines
Regarding CEA loans specifically, the RBCS portfolio currently contains $311.9 million in related loans. Of that number, 43% (or $135 million) are delinquent.
All actions are being done to “ensure prudent stewardship of federal resources.”
During this period, existing loans will not be affected, with the pause only applying to new loan guarantees that have not yet been approved and awarded.
For additional information on the administrative pause, please read the official USDA release here.