USDA clarifies Schafer's comments on loan program

By Erin Voegele | October 06, 2008
Web exclusive posted Oct. 27, 2008 at 10:52 a.m. CST

The National Grain and Feed Association submitted a statement to U.S. Secretary of Agriculture Ed Schafer on Oct. 21 laying out concerns about comments Schafer made regarding the USDA's Business and Industry Loan Guarantee Program after his Oct. 17 address at the World Food Prize Symposium.

According to the NGFA statement, Schafer said the USDA is considering awarding up to $25 million in rural development funds to ethanol plants that are under pressure because they've been speculating on corn. However, the USDA said the information Schafer shared about the agency's Business and Industry Loan Guarantee Program was taken out of context.

The program was established in 1974, designed to help local rural business. It's not a program that specifically targets ethanol companies. The Business and Industry Loan Guarantee Program backs loans from private lenders for up to $25 million for credit-worthy entities. Loans are only given after due diligence is performed and the USDA has reviewed the businesses cash flow, management and other issues. Although local, rural ethanol companies may be eligible for loans under the program, the USDA said the program is not designed to bailout ethanol companies.