Fact Sheet: 

Business and Industry Guaranteed Loan Program and Urban Eligibility

for Local and Regional Food Projects

On April 30th, 2014, USDA Rural Development published a notice in the Federal Register 

(https://www.federalregister.gov/articles/2014/04/30/2014-09870/locally-or-regionallyproduced-agricultural-food-products) clarifying how the Business and Industry (B&I) Guaranteed 

Loan Program can be used to support local and regional food-related projects. The B&I program 

guarantees loans that provide lasting community benefits by improving, developing or financing 

business, industry or employment-related projects. Eligible applicants include cooperatives, 

corporations, partnerships, or other for-profit or nonprofit entities; Indian tribes; or individuals.

Each year, at least five percent of B&I funds are set aside for local food-related projects. Under 

this set aside, the B&I program provides loan guarantees for entities that process, distribute, 

aggregate, store and/or market locally or regionally-produced agricultural food products to 

support community development and farm and ranch income. Although the set aside expires on 

April 1 of each year, USDA Rural Development continues to fund local food-related projects after 

April 1. 

What does the notice do? 

The notice published on April 30th clarifies that among local and regional food projects, funding 

priority will be given to those that provide a benefit to underserved communities, which is 

defined as an urban, rural, or Indian tribal community with limited access to affordable, healthy 

foods, including fresh fruits and vegetables, and a high rate of hunger or food insecurity or a high 

poverty rate. Applicants that serve schools, food banks or other institutions may also be eligible. 

Which projects are eligible? 

Eligible projects can be located in an urban or rural area. Funding priority will be given to 

projects that provide a benefit to underserved communities as defined above. For example, a 

local food distribution center physically based in an urban area would be eligible for priority 

funding if a meaningful portion of its product is made available to consumers in an underserved 

community or to food banks, schools or other institutions serving low-income populations. The 

urban-based entity would need to demonstrate support for community development and farm 

and ranch income – for example, by sourcing food from local farms based in rural areas. (See 

reverse side for examples of projects that would be eligible for the set aside funds and/or funding 

priority.)

For more information, see the Rural Development website for B&I 

(http://www.rd.usda.gov/programs-services/business-industry-loan-guarantees) or the recent Federal 

Register notice (https://www.federalregister.gov/articles/2014/04/30/2014-09870/locally-orregionally-produced-agricultural-food-products). 
Three Scenarios for Local Food Aggregators-Distributors (i.e. food hubs) to Utilize B&I funds

Scenario #1 – A local food aggregator-distributor called “Close to Home” is based in Oakland, CA and aggregates 

from over 120 local farmers and producers and sells these food products to Bay Area restaurants, supermarkets, 

schools, and hospitals. Restaurants and supermarkets have always made up the greatest portion of their sales,

but a new contract with Oakland Unified School District would mean that close to 20% of their overall gross sales 

will be to this school district of over 40,000 students. Many of these schools and their student populations are 

located in underserved communities. Close to Home is looking for financing to expand their existing distribution 

facility to meet the growing demand in the institutional marketplace from schools, hospitals, and others. 

- Are they eligible? Yes. The funding will be used to expand their operations so they can adequately meet 

the needs of a school district where a majority of the student population and their families are located in 

underserved communities. The project would also be eligible for funding priority because it provides a 

benefit to an underserved community. 

Scenario #2 – A local food business called “City Food Delight” based in Detroit, MI works with a network of 10 

urban farm enterprises to market their products directly to consumers through a produce box subscription 

program. City Food Delight has a mission of ensuring affordable local food to all and does this by having affluent 

customers pay more for a weekly box of produce, which in turn allows the company to sell the boxes at a lower 

price to underserved communities. Under this arrangement, close to 30% of their overall gross sales are in low 

income/low food access communities. City Food Delight is looking to expand their business by purchasing two 

more walk-in coolers and another refrigerated truck for their aggregation-distribution facility, which is NOT 

located in an underserved community.

- Are they eligible? Yes. Even though their business is not located in an underserved community, a 

significant portion of their sales are targeted to underserved communities, who are benefiting from greater 

access to affordable, healthy local food. Also, it is fine to work exclusively with urban producers, as long as 

there are clear benefits that accrue to them, which in this case is another market channel that gives them a 

fair and stable financial return for the products. The project would also be eligible for funding priority 

because it provides a benefit to an underserved community.

Scenario #3 – A local food distributor named “Organic Roots” is based in New York City, NY and they are 

planning to renovate an existing warehouse to be their primary aggregation-distribution facility, which is located 

in a low income/low food access neighborhood. Organic Roots works with 50 organic farmers in upstate NY and 

sells their products to high-end supermarkets and restaurants. These farmers benefit greatly from this 

collaboration with Organic Roots with new market access and high financial returns. Organic Roots intends to 

employ most of their staff for running the renovated warehouse from the community where it is located, and 

the company is committing additional resources for workforce training and development. In total, they expect 

to create at least 20 full-time quality jobs in warehousing and trucking. 

- Are they eligible? Yes. Even though Organic Roots is not selling local food products to an underserved 

area, they are creating tangible benefits to this underserved community through workforce development 

and job creation as well as supporting rural community development and farm and ranch income. The 

project would also be eligible for funding priority because it provides a benefit to an underserved 

community.