USDA extends pause on RBCS loan guarantees for biodigesters, indoor ag projects
USDA extended its pause on loan guarantees for biodigesters and controlled environment agriculture projects due to high delinquency rates and financial risk. The pause will remain in effect through the end of 2026 while the agency reviews portfolio performance and updates underwriting standards.
Key takeaways
- USDA extended a pause on certain loan guarantees through Dec. 31, 2026.
- CEA projects show a 40% delinquency rate; biodigesters 28%.
- Pending applications will be withdrawn until new standards are issued.
The U.S. Department of Agriculture (USDA) is extending a pause on loan note guarantees for certain rural development projects, citing elevated delinquency rates and financial risk.
In an unnumbered letter, USDA said the pause on accepting, processing and awarding guarantees under Rural Business & Cooperative Service (RBCS) programs will continue through Dec. 31, 2026, or until further guidance is issued. The action applies to projects involving biodigesters and controlled environment agriculture (CEA), including vertical farming, hydroponics, aeroponics and aquaponics.
A portfolio review found delinquency rates of 40% for CEA projects and 28% for biodigesters, in addition to realized losses. USDA said continuing to guarantee high-risk projects, particularly those backed by lenders with limited expertise, could affect the long-term stability of the program.
The agency said the extension will slow the addition of these projects while staff complete a broader performance review, evaluate lender underwriting capabilities and develop stronger safeguards. Pending applications in the affected categories will be withdrawn and cannot proceed until updated underwriting and risk mitigation standards are released.
USDA said failing to implement the pause could increase subsidy costs and reduce available capital for other rural projects.
FAQ
Q: What programs are affected by the pause?
A: Rural Business & Cooperative Service (RBCS) loan guarantee programs.
Q: Which project types are included?
A: Biodigesters and controlled environment agriculture projects such as vertical farming, hydroponics and aquaponics.
Q: How long will the pause last?
A: Through Dec. 31, 2026, or until further guidance is issued.
Q: What happens to pending applications?
A: They will be withdrawn and cannot move forward until new guidance is released.
Q: Why did USDA extend the pause?
A: Due to high delinquency rates, financial losses and concerns about lender underwriting capacity.
What this means
The agency is limiting exposure to higher-risk project types while reassessing lending standards and program oversight.