SBA loans for egg farms

What lenders check

Each lender sets its own checklist. SBA sets the basic eligibility tests.

A lender reviewing a loan to egg farms looks at the business's numbers and these items for the trade:

• Hen housing type and flock size, including whether the barns meet the cage-free rules of the states where the eggs are sold
• The egg buyer, whether a packer, grocery chain or direct customers, and whether the price follows the wholesale egg market
• Biosecurity plans and any indemnity or insurance for avian influenza, since one outbreak can empty a barn

Common uses of the money

Businesses like these use SBA loans for:

• A new or converted laying barn with feeding, watering and egg-collection systems
• Egg washing, grading and carton-packing equipment so the farm can sell finished cartons
• Pullets to restock a barn after a flock is retired or lost

Collateral

Layer houses and the land under them carry most of the value, while hens and egg-handling equipment add less.

How much they borrow

35% of these loans were $500,000 or less, the range where SBA Express is available.

The median loan was $955,000, larger than the $150,300 median for all SBA 7(a) loans. Half of the loans fell between $393,000 and $2.96 million. The most common size band was Over $2,000,000.

By business age, 25% had operated for more than 2 years and 14% for 2 years or less. 55% were startups opening with the loan, and 6.1% paid for a change of ownership.

How the money comes

18% of the loans went through SBA Express and 16.5% were lines of credit. The median term was 15 years.

Across all industries, 36% of loans went through SBA Express and 28% were lines of credit. Express counts here include Export Express.

The median term was 15 years (180 months). For equipment, SBA's maximum term is 10 years, or up to 15 years if the IRS asset class useful life supports it. For real estate, it is 25 years, plus any reasonable construction or renovation period. Source: SOP 50 10 8.1: App. 17, Para. A.2 (p. 390); App. 17, Para. A.3 (p. 390); 13 CFR § 120.212(c).

When farm land and structures are 51% or more of the proceeds, the maximum term is 20 years. When farm machinery and equipment are 51% or more, it is the useful life of the equipment, up to 15 years. Source: SOP 50 10 8.1: App. 17, Para. A.7 (p. 390).

Where the loans are

Arkansas had the most loans, 32 of 115 (28%).

Location is the state of the business, not of the lender.

Compare every state on SBA loans by state.

How often these loans went bad

0% of 99 seasoned loans were charged off, below the 3.6% rate for all SBA 7(a) loans.

None of the 99 loans approved October 1, 2019 to September 30, 2022 were charged offcharged offThe lender wrote the loan off as a loss because it was not being repaid. by June 30, 2026. By dollars, 0% of the approved amount was charged off.

SBA size standard

NAICS 112310 has its own size standard.

For NAICS 112310, SBA's size standard is $19 million in average annual receipts. A business at or under the standard is small for SBA's purposes. To qualify, a business must fit the size standard for the applicant's primary industry in 13 CFR 121.201, measured in annual receipts or employees. SBA measures size on the date the application is accepted for SBA processing, or for delegated loans the date the lender approves the loan.

A business over the standard can still qualify under the alternative standard: tangible net worth of $20 million or less and average net income after federal income taxes of $6.5 million or less over the prior two fiscal years. Source: SOP 50 10 8.1: Sec. A, Ch. 1, Para. D.1 (p. 14); Sec. A, Ch. 1, Para. D.2 (p. 14); 13 CFR § 121.301(b)(2).