RBCS RFA Meat and Poultry Intermediary Lending Program-5_26_2022.docx

DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service Meat and Poultry Intermediary Lending Program AGENCY: Rural Business-Cooperative Service, USDA.

SUMMARY: The Rural Business-Cooperative Service (Agency), an agency of the United States Department of Agriculture (USDA) Rural Development mission area (RD) announces the availability of $200 million in grants, applicant and application requirements, and servicing requirements under the Meat and Poultry Intermediary Lending Program (MPILP) for fiscal year (FY) 2022. Grants will be made to intermediaries to facilitate financing to qualified ultimate recipients for projects involving the start-up or expansion of meat and poultry processors to increase access to capital and processing capacity and help create a more resilient, diverse, and secure U.S. food supply chain. Interested parties bear the financial burden of preparing and submitting an application in response to this notice.

ADDRESSES: You are encouraged to contact the Agency to discuss your project work plan and ask any questions about the program or application process. Applications will only be accepted electronically through https;//www.grants.gov (Grants.gov) or the MPILP website by following the directions provided there and at https://www.rd.usda.gov/mpilp. Entities wishing to apply for assistance may download the application documents and requirements delineated in this notice from: https://www.rd.usda.gov/mpilp.

FOR FURTHER INFORMATION CONTACT: Kevin Boone, Program Management Division, Business Programs, Rural Business-Cooperative Service, U.S. Department of Agriculture, 1400 Independence Avenue, SW, MS 3226, Room 5801-S, Washington, D.C. 20250-3226, telephone: (202) 720-1400 or email: MPILP@usda.gov.

SUPPLEMENTARY INFORMATION:

All applicants are responsible for any expenses incurred in developing their applications. The intermediary is responsible for assuring that all requirements for making, securing, servicing, and collecting the loan made to each ultimate recipient have been met. Whether specifically stated or not, whenever Agency approval is required, it must be in writing. Copies of all forms and regulations referenced in this notice may be obtained from any Agency office and from the USDA RD website at https://www.rd.usda.gov.

Overview Federal Agency Name: Rural Business-Cooperative Service.

Funding Opportunity Title: Meat and Poultry Intermediary Lending Program.

Announcement Type: Initial Notice.

Assistance Listing (formerly Catalog of Federal Domestic Assistance): 10.382 Dates: The deadlines for completed applications to be received through Grants.gov or the MPILP website for semiannual funding competitions is no later than 4:30 p.m. (local time) on: July 25, 2022 for the first round and December 31, 2022 for the second round.

Administrative: Applicants are encouraged to consider work plans that will advance the goals of providing access to capital for meat and poultry processors and strengthening the financing capacity for the sector and that will promote the following key priorities (additional information on the key priorities is available at https://www.rd.usda.gov/priority-points):

· Assisting rural communities recover economically from the impacts of the COVID–19 pandemic, particularly disadvantaged communities;

· Ensuring all rural residents have equitable access to Rural Development (RD) programs and benefits from RD funded projects; and

· Reducing climate pollution and increasing resilience to the impacts of climate change through economic support to rural communities.

In addition, the Agency highlights the importance of strengthening resiliency of the meat and poultry processing sector and the broader food supply chain, including through addressing current food supply chain related disruptions. Applications received by the deadline(s) will compete for available funds based on a score ranking. In the event of a tie in scoring, the Agency will offer to split remaining funding as needed to involve more lenders in the program. There is no tiebreaker procedure.

Table of Contents

A. PROGRAM DESCRIPTION

1. Purpose of the Program.

Meat and Poultry Processing Intermediary Lending Program (MPILP) grants are available to qualified applicants (intermediary lenders) to facilitate financing for the start-up, expansion, and operation of entities engaged in primary processing (slaughter) or further processing of meat and poultry, to strengthen the financing capacity for independent processors, and to help create a more resilient, diverse, and secure U.S. food supply chain. The MPILP will also help strengthen the capacity of lenders that are financing or plan to finance meat or poultry processors. Eligible processing facilities include USDA inspected facilities that process amenable species under a Federal Grant of Inspection, facilities that process nonamenable species eligible for voluntary USDA inspection, state or tribal inspected facilities that adhere to USDA regulations, and custom exempt facilities that adhere to USDA regulations. As reflected in the public comments to AMS–TM–21–0058, Investments and Opportunities for Meat and Poultry Processing Infrastructure, 86 FR 37728 (July 16, 2021), access to capital through loans was identified as a need for small and mid-sized meat and poultry processors. This program will expand access to financing for meat and poultry processing in the near term and will build financing capacity longer term. This program will facilitate access to affordable capital to address the ongoing need for meat and poultry processing enterprises in America’s rural and urban communities, as there are no geographic restrictions. All applicable program requirements in their entirety can be found in this notice.

2. Statutory Authority.

Section 751 of the Consolidated Appropriations Act of 2021 authorizes the Secretary of Agriculture to “... to prevent, prepare for, and respond to coronavirus by providing support for agricultural producers, growers, and processors impacted by coronavirus.” Given this authority, and appropriations provided for this purpose in Section 751, up to $200 million in budget authority is being made available for the Meat and Poultry Intermediary Lending Program.

3. Notice Overview.

(1) This notice contains general provisions for making Agency MPILP grants and applies to intermediaries, and other parties involved in making, servicing, or liquidating such grants. Additionally, this notice contains general provisions for ultimate recipients of loans made by intermediaries.

(2) Each intermediary is responsible for assuring compliance with all requirements for making, securing, servicing, and collecting repayment on loans made with MPILP capital.

(3) Whether specifically stated or not, whenever Agency approval is required, the intermediary is obligated to obtain written approval from the Agency.

(4) All forms and regulations referenced in this notice may be obtained from the USDA Rural Development website at https://www.rd.usda.gov.

(5) Accounting terms. Accounting terms not otherwise defined in this part shall have the respective definitions ascribed to them under Generally Accepted Accounting Principles (GAAP).

Whenever this Notice imposes a requirement on loans made from the “MPILP revolving loan fund,” such requirement will apply to all loans made by an intermediary to an ultimate recipient from the intermediary’s MPILP revolving fund for as long as the fund remains operational. This includes revolved funds. Whenever this Notice imposes a requirement on loans made by intermediaries to ultimate recipients from “Agency MPILP grant funds,” without specific reference to the MPILP revolving loan fund, such requirement shall apply only to the initial loans made by an intermediary using Agency MPILP grant funds and will not apply to loans made from revolved funds.

4. Definition of Terms. The following definitions are applicable to this notice:

Affiliate. Individuals and entities are affiliates of each other when: (1) One controls or has the power to control the other, or a third party or parties controls or has the power to control both. Factors such as ownership, management, current and previous relationships with or ties to another concern, and contractual relationships, shall be considered in determining whether affiliation exists. It does not matter whether control is exercised, so long as the power to control exists. Businesses, enterprises, and corporations owned and controlled by Indian Tribes, Alaska Native Corporations (ANCs), Community Development Corporations (CDCs), Native Hawaiian Organizations (NHOs), or wholly owned entities of Indian Tribes, ANCs, NHOs, or CDCs, are not considered to be affiliated with other entities owned by these entities solely because of their common ownership or common management. (2) There is an identity of interest between immediate family with identical or substantially identical business or economic interests (such as where the immediate family operate concerns in the same or similar industry in the same geographic area); however, an individual or entity may rebut that determination with evidence showing that the interests deemed to be one are in fact separate.

Agency. The Rural Business-Cooperative Service or successor Agency assigned by the Secretary of Agriculture to administer the MPILP.

Agency MPILP grant. An MPILP grant from the Agency to an intermediary with established terms and evidenced by a financial assistance agreement between parties.

Agency MPILP grant funds. Cash proceeds of an Agency MPILP grant received by an intermediary are considered Agency MPILP grant funds.

Agriculture Production. The cultivation, growing, or harvesting of plants and crops (including farming) breeding, raising, feeding, or housing of livestock (including ranching); forestry products, hydroponics, or nursery stock; or aquaculture.

Arm’s-length transaction. A transaction in which the buyer and seller act independently and have no relationship to each other. The concept of an arm’s length transaction allows the market to ensure that both parties in the deal are acting in their own self-interest and are not subject to any pressure or duress from the other party.

Bond. A form of debt security in which the authorized issuer (ultimate recipient) owes the bond holder (intermediary) a debt and is obligated to pay interest at specified intervals and repay the principal at a specified maturity date. An explanation of the type of bond and other bond stipulations must be attached to the bond.

Citizen. An individual who is a citizen of the United States or resides in any State in the United States after being legally admitted for permanent residence.

Collateral. The assets pledged by the ultimate recipient to the intermediary to secure the loan.

Commercially available. A system that meets the requirements of either paragraph (1) or (2) of this definition.

Conflict of interest. A situation in which a person or entity has competing personal, professional, or financial interests that make it difficult for the person or business to act impartially, or there is a real or perceived benefit from engaging in certain projects or transactions. Regarding use of both grant and matching funds, Federal procurement standards prohibit transactions that involve a real or apparent conflict of interest for owners, employees, officers, agents, their immediate family members, partners, or an organization which is about to employ any of the parties indicated herein, having a financial or other interest in or tangible personal benefit from the outcome of the project; or that restrict open and free competition for unrestrained trade. Specifically, project funds may not be used for services or goods going to, or coming from, a person or entity with a real or apparent conflict of interest, including, but not limited to, owner(s) and their immediate family members.

Cooperative. An entity that is legally chartered by the State or Tribe in which it operates as a cooperatively operated business, or an entity that is not legally chartered as a cooperative but is owned and operated for the benefit of its members, with returns of residual earnings paid to such members on the basis of patronage.

Custom exempt. The regulatory exemption process of the USDA Food Safety and Inspection Service as applied to cattle, sheep, swine and goats, per 9 CFR Part 303, and to domesticated chickens, turkeys, ducks, geese, guineas, ratites, or squabs per 9 CFR 381.10. There are no custom exemptions for Siluriformes (catfish).

Debt Collection Improvement Act. The Debt Collection Improvement Act of 1996, 31 U.S.C. 3701 et seq.

Default. The condition that exists when an ultimate recipient is not in compliance with the promissory note, the loan agreement, or other documents relating to the loan. Default could be a monetary or non-monetary default.

Delinquency/Delinquent loan. A loan for which a scheduled loan payment is more than 30 days past due and cannot be cured within 30 days.

Farmer or rancher cooperative. An entity that is owned and controlled by agricultural producers and that is incorporated, or otherwise recognized by the State or Tribe in which it operates as a cooperatively operated business or an entity that is not legally chartered as a cooperative but is owned and operated for the benefit of its members, with returns of residual earnings paid to such members on the basis of patronage.

Federal debt. Debt owed to the Federal Government that is subject to collection under the Debt Collection Improvement Act.

Financial Assistance Agreement. Form RD 4280-2, Rural Business-Cooperative Service Financial Assistance Agreement, or successor form is an agreement between the Agency and the intermediary setting forth the provisions under which the grant will be administered.

Grant. For the purposes of MPILP only, a transfer of monies other than a loan, from the Agency to an intermediary for specific use in funding a revolving loan fund from which loans are made to ultimate recipients or for lender operations.

Immediate family. Individuals who live in the same household or who are closely related by blood, marriage, or adoption, such as a spouse, domestic partner, parent, child, stepchild, sibling, aunt, uncle, grandparent, grandchild, niece, nephew, or first cousin.

Independent. Not influenced or controlled by others in matters of opinion, conduct, etc. and not subject to another's authority or jurisdiction.

Indian Tribe. Any Indian or Alaska Native tribe, band, nation, pueblo, village or community as defined by the Federally Recognized Indian Tribe List Act (List Act) of 1994 (Pub. L. No. 103-454).

Interest. A fee paid by an ultimate recipient to the intermediary as a form of compensation for the use of money. When money is borrowed, interest is paid as a fee over a certain period of time (typically months or years) to the intermediary as a percentage of the principal amount owed. The term interest does not include default or penalty interest or late payment fees or charges.

Interim financing. A temporary or short-term loan made with the clear intent when the loan is made that it will be repaid through another loan that provides permanent financing. Interim financing is frequently used to pay construction and other costs associated with a planned project, with permanent financing to be obtained after completion of project construction.

Intermediary. The entity requesting or receiving, as applicable, Agency MPILP grant funds for establishing or recapitalizing an MPILP revolving loan fund and relending to ultimate recipients.

Intermediary equity contribution. Represents an intermediary’s investment in the MPILP revolving loan fund, in the form of cash and unencumbered ownership in an amount determined by the applicant. This must be contributed to the MPILP revolving loan fund prior to, or concurrently with, the disbursement of Agency MPILP grant funds from the Agency. This contribution becomes restricted and must remain as equity in the MPILP revolving loan fund for the life of the fund.

Loan packager. A person, other than the applicant ultimate recipient or intermediary, that prepares a loan application package on behalf of the ultimate recipient or intermediary.

Meat. Species amenable to USDA inspection including cattle, sheep, swine, goats, Siluriformes (catfish), and equine.

Military personnel. Individuals currently on active duty in the regular service, having enlisted from civilian or Reserve Officers’ Training Corps status, or individuals on active duty in the regular service with more than six months until their anticipated date of release from service.

MPILP Revolving Loan Fund. A group of assets: (1) Obtained through or related to an Agency MPILP grant; and (2) Accounted for, along with related liabilities, revenues, and expenses, as an entity or enterprise separate from the intermediary’s other assets and financial activities.

National Appeals Division (NAD). A division of the United States Department of Agriculture as described in 7 CFR part 11.

Nonamenable species. Species eligible for voluntary federal inspection, specifically rabbit ,9 CFR Part 354; exotic species, 9 CFR Part 352, antelope, bison, buffalo, catalo or cattalo, deer, elk, reindeer, water buffalo, yak; voluntary poultry, 9 CFR Part 362, migratory waterfowl, and game birds.

Participation. Sale of an interest in a loan by the lead lender (intermediary) to one or more participating lenders wherein the intermediary retains the note, collateral securing the note, and all responsibility for managing and servicing the loan. Participants are dependent upon the intermediary for protection of their interests in the loan. The relationship is typically formalized by a participation agreement. The participants and the ultimate recipient have no rights or obligations to one another.

Passive investor. An equity investor who does not actively participate in management and operation decisions of the ultimate recipient or any affiliate of the ultimate recipient as evidenced by a contractual agreement.

Poultry. Species amenable to USDA inspection including chickens, turkeys, ducks, geese, guineas, ratites, and squabs (young pigeons).

Processing. Slaughter (primary processing) and further processing as defined in 9 CFR 301.2 Program or MPILP Program. Program means the Meat and Poultry Intermediary Lending Program authorized by Section 751 of the Consolidated Appropriations Act of 2021 and administered by the Agency.

Promissory note. The legal instrument evidencing debt executed by the ultimate recipient to an intermediary with stipulated repayment terms. The term promissory note includes bonds and other related debt instruments issued by the ultimate recipient to an intermediary.

Public agency. Any Indian Tribe, State or local government, or any branch or agency of such government having authority to act on behalf of that government, to borrow funds and engage in activities eligible for funding under this Notice.

Public body. A state, municipality, county, or other political subdivision of a State; a special purpose district; an Indian Tribe; or an organization controlled by any of the above.

Revolved funds. The cash portion of an MPILP revolving loan fund that includes fees, principal, and interest payments that have been repaid to an intermediary by ultimate recipients and is not composed of any Agency MPILP grant funds.

Scope of Work. A narrative provided by the intermediary that demonstrates the feasibility of the intermediary and its lending program to meet the objectives of the MPILP program, including a set of goals, strategies, anticipated outcomes, and well-developed targeting criteria for assisting eligible ultimate recipients.

State. Any of the 50 States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, the Republic of Palau, the Federated States of Micronesia, and the Republic of the Marshall Islands.

Technical assistance. A function performed for the benefit of an ultimate recipient, or proposed ultimate recipient, that is a problem-solving activity that assists the ultimate recipient in selecting, initiating, or completing a project. The Agency will determine whether a specific activity qualifies as technical assistance.

Transfer and assumption. The Agency-approved conveyance by an ultimate recipient to an assuming borrower of the assets, collateral, and liabilities of the loan in return for the assuming borrower’s binding promise to repay the loan.

Tribal Entity. An expansive term that includes all entities falling under eligible legal structures, including but not limited to: tribal owned corporations, intertribal non-profits and associations, Alaska Native Corporations, Native entities within the State of Alaska recognized by and eligible to receive services from the U.S. Department of the Interior’s Bureau of Indian Affairs, Native Hawaiian organizations including Homestead Associations, State recognized tribes/non-profits, and individually-owned Native American entities.

Ultimate recipient. An entity or individual that receives a loan from an intermediary’s Agency MPILP grant funds or MPILP revolving loan fund.

5. Application Awards. The Agency will review, evaluate and score applications received in response to this notice based on the provisions found in this notice.

B. FEDERAL AWARD INFORMATION

Type of Award: Grant Fiscal Year Funds: FY 2022.

Available Funds: Funding for the MPILP program in FY 2022 is up to $200 million in funds from Section 751 of the Consolidated Appropriations Act of 2021. The first cycle of funding for which applications will be accepted begins May 26, 2022 and will have $75 million available. The second cycle of funding for which applications will be accepted begins November 1, 2022 and will have $125 million available.

Maximum Award: The maximum, aggregate grant amount that an Intermediary may receive is $15 million. Applicants that apply in both cycles, may receive a total of up to $15 million in MPILP funds across both cycles. Funds made available through the Meat and Poultry Intermediary Lending Program are available to facilitate access to capital for entities that establish and facilitate the slaughter and further processing of meat and poultry to increase capacity and help create a more resilient, diverse, and secure U.S. food supply chain.

Minimum Award: The minimum amount for which an intermediary may apply is $500,000.

Maximum Loan to Ultimate Recipient: There is no maximum loan amount that the intermediary may make to an eligible ultimate recipient though the use of Agency MPILP grant funds, the MPILP Revolving Loan Fund, or leveraged funds. However, no more than $10 million of MPILP grant funds may be used for any single loan.

Period of Performance: Agency MPILP grant funds should be drawn down and loaned by the intermediary within three years of the date of award. Intermediaries may draw down funds from the Agency at most on a monthly basis and funds must be held in an FDIC-insured account. Any Agency MPILP grant funds not loaned by the intermediary to ultimate beneficiaries during that period must be returned to the Agency. Any Agency MPILP grant funds not drawn down during the three-year timeframe will not be available to the intermediary. The intermediary may request and receive, at most, two extensions for the obligation of funds to Ultimate Recipients totaling no more than two years. Annual reports are required during the five-year reporting period. Additional information on annual reports and other reporting requirements are found in Section K, Post Award Requirements.

Anticipated Award Dates – First Cycle Funding, September 30, 2022; and Second Cycle Funding, February 28, 2023. Note that awards are contingent on completion and approval of environmental reviews.

Renewal or Supplemental Awards: None. However, applicants may apply for funding in both cycles announced in this Notice.

C. ELIGIBILITY INFORMATION

1 Eligible Intermediaries.

(1) Except as provided in paragraph (d)(2) of this section, such record must include recent experience in loan making and servicing with loans that are similar in nature to those proposed by the intermediary and a delinquency and loss rate acceptable to the Agency. Any request for an exception must be specifically addressed in the loan application and be supported with concluding statements that relate to the items specified in paragraphs (d)(2)(i) and (ii) of this section.

(2) The Agency may approve an exception to the requirement for loan making and servicing experience provided the intermediary:

(i) Itself has a proven record of successfully assisting (other than through lending) meat or poultry processors through technical assistance or business development projects to processors; and

(ii) Will, before the Agency MPILP grant is obligated, employ individuals with loan making and servicing experience and qualifications and expertise for the operation and administration of an MPILP revolving loan fund as described in this notice. These shall not include contracted staff and staff from affiliates of the intermediary.

(m) Restrictions. Intermediaries established for the purpose of, or that predominantly use Agency MPILP grant funds for, the financial benefit of an affiliate through loan participations or other funding is a conflict of interest.

(n) Insurance. Intermediaries must hold and maintain policies for fidelity bond coverage or employee dishonesty insurance that protects the intermediary from losses incurred as a result of theft from its employees.

2. Eligible Ultimate Recipients.

3. Eligible Uses of Funds.

Intermediaries receiving grants must finance a revolving loan fund that the intermediary will operate and administer. All grants awarded under this notice are subject to 2 CFR part 200 or successor regulation, as applicable. Ultimate recipients must demonstrate, to the Agency’s satisfaction, that loan funds will remain in the United States and the facility being financed and the uses of the loan funds will support the start-up, expansion, or operation of activities in the processing of meat or poultry, to increase capacity and help create a more resilient, diverse, and secure U.S. food supply chain. Funds designated in the work plan for lending but not used for that purpose during the period of performance must be returned to the Agency. Loans to ultimate recipients funded with Agency MPILP grant funds must meet the eligible uses of this section until these funds are repaid into the MPILP revolving loan fund. Once MPILP revolving loan funds have been repaid to the intermediary, those funds are considered revolved funds. Intermediaries may use intermediary equity contributions and revolved funds to make loans to ultimate recipients in accordance with the eligible uses of the Agency MPILP grant funds and other purposes as described below and in accordance with the Food Supply Chain Guaranteed Loan Program, although an increase in capacity is not required for MPILP loans. The Food Supply Chain Guaranteed Loan Program facilitates loans for activities in the middle of the food supply chain and more information about eligible uses of funds under that program is available in Section C(b) of the Federal Register notice (86 FR 70086). A table comparing the Food Supply Chain Guaranteed Loan Program and MPILP is available on the MPILP program website at https://www.rd.usda.gov/mpilp.

Eligible uses of funds in the MPILP include, but are not limited to, the following:

(a) The bond holder (intermediary) retains 7.5 percent of the bond.

(b) The bonds must be fully secured with collateral.

(c) The bonds must only provide for a trustee when the trustee is totally under the control of the intermediary. The bonds must provide no rights to bond holders other than the right to receive the payments due under the bond. For instance, the bonds must not provide for bond holders replacing the trustee or directing the trustee to take servicing actions, such as accelerating the bonds. Convertible bonds are not eligible under this paragraph due to the potential conflict of interest of an intermediary having an ownership interest in the ultimate recipient.

(d) The bond issuer (ultimate recipient) must obtain the services and opinion of an experienced bond counsel who must render a legal opinion stating that the bonds are duly authorized, valid, and binding obligations of the issuer and that the issuer has complied with all applicable laws and requirements in connection with the issuance of the bonds.

(e) The bond holder (intermediary) must purchase all the bonds and comply with all Agency regulations. There must be a bond purchase agreement between the issuer and the bond holder. The bond purchase agreement must contain similar language to what is required to be in a loan agreement in accordance with this notice and must be in form and substance satisfactory to the Agency. The bond holder is responsible for all servicing of the loan (bond), although the bond holder may contract for servicing assistance, including contracting with a trustee who remains under the intermediary’s total control.

4. Ineligible Entities

(1) An entity is ineligible if any of the conditions identified in paragraphs (a) through (d) below apply to the intermediary or the ultimate recipient, any owner with more than 20 percent ownership interest in the intermediary or ultimate recipient (does not include passive investors), or any owner with control of the intermediary or ultimate recipient.

(a) There is an outstanding judgment obtained by the U.S. in a Federal Court (other than U.S.