Growers’ eligibility for loans comes into question
WASHINGTON — A March report from the U.S. Small Business Administration’s inspector general said many poultry growers were too attached to their massive integrators to be eligible for loans from the federal agency.
The SBA itself disagreed and continues to approve lending to poultry growers through its 7(a) loan program, created to help startup and existing small businesses.
Whether the disagreement has discouraged lenders from participating in the program remains unclear, however.
“It certainly clouds the issue,” said John Fleming, director the SBA’s Delaware office.
After reviewing a sample of SBA loans to poultry growers, the inspector general determined that poultry integrators exercised heavy control over growers through contractual restrictions, management agreements, oversight inspections and market controls. In essence, the report said, growers didn’t operate independently of their integrator and were ineligible for SBA-guaranteed loans.
The SBA approved nearly $2 billion in loans between fiscal years 2012 and 2016 that may have been ineligible, the report claimed.
The SBA disputed that when the report was debated in Congress.
The issue hasn’t discouraged Live Oak Bank, based in Wilmington, N.C., said a loan officer who asked to remain anonymous because he wasn’t authorized to speak on behalf of the bank.
The bank occasionally lends to farmers in the Mid-Atlantic region.
“We will always follow the rules as written,” the officer said. “If the SBA allows us to do a poultry loan or extend financing that we deem eligible, we will do that.”
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