SBA "Grocery Guarantee" Expands Financing Options for Food & Beverage Businesses
The U.S. Small Business Administration (SBA) recently announced a "Grocery Guarantee" initiative aimed at increasing access to capital across the domestic food supply chain.
SBA Administrator Kelly Loeffler intends that the Grocery Guarantee program will "drive even more investment in our nation's food supply chain—infusing farmers, ranchers, and logistics providers with expanded access to capital that will increase production, processing, and distribution."
The initiative is not a new standalone loan program, but rather an expansion of the SBA's existing International Trade Loan (ITL) program.
The most significant change is an increase in the SBA's loan guarantee to up to 90%, compared to the typical approximately 75% guarantee under standard 7(a) loans. By shifting more credit risk to the federal government, the program is designed to encourage lenders to extend financing to businesses that may not otherwise meet conventional underwriting standards.
By way of example, a regional packaged food company seeking to scale distribution may require financing to build out a production facility. While a traditional lender may hesitate to finance the opportunity due to limited operating history or insufficient collateral, under this initiative, the SBA could guarantee up to 90% of the loan, materially reducing the lender's downside exposure and increasing the likelihood that financing is approved.
The scope of eligibility has also been broadened. Historically limited to export-related businesses, the ITL program now applies to a wide range of domestic food supply chain participants, including agricultural producers, food manufacturers, distributors, logistics providers, and grocery retailers. Loans of up to $5 million may be available and can be used for capital expenditures such as equipment purchases, facility buildouts, and supply chain infrastructure, as well as certain working capital needs.
Importantly, the program remains lender driven. Loans are originated and underwritten by private lenders, with the SBA providing a partial guarantee. Borrowers do not apply directly to the SBA. Instead, access to the program depends on a lender's willingness to extend credit, informed by the enhanced federal guarantee.
Clients interested in pursuing this option should begin by engaging with an SBA-active lender, as lenders—not the SBA—control the underwriting and application process. The SBA also offers a national Lender Match tool, which connects borrowers with participating lenders.
For food and beverage businesses—particularly those that are early-stage but capital-intensive—this expansion may provide a meaningful new avenue for growth financing. That said, standard SBA requirements, including size standards, affiliation rules, and lender underwriting criteria, continue to apply.
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Ronald Law is counsel, Dylan Lowe is an associate, and Jesse Lyon is a partner in the Seattle and Portland offices of DWT. For questions or more insights, reach out to the authors or another member of our food + beverage team and sign up for our alerts.