USDA B&I Loan Application Package

Valley Farm Supply Co. is a 15-year-old agricultural equipment and supply retailer serving a 4-county farming region in central Kansas. Headquartered in Salina, KS, the company sells and services farm equipment, irrigation systems, animal feed, seed, fertilizer, and crop protection products. With 18 employees and $960,000 in annual revenue, Valley Farm Supply is the primary agricultural supply center for over 200 farming operations within a 50-mile radius.

The company is requesting a $500,000 USDA Business & Industry (B&I) guaranteed loan to fund a warehouse and distribution facility expansion. The project includes an 8,000 sq ft building addition ($320,000), loading dock and equipment ($85,000), site work and utilities ($45,000), and working capital ($50,000). The expansion will increase storage capacity by 60%, enabling the company to stock higher-margin products year-round and reduce emergency supplier shipments that currently cost $18,000-$24,000 annually in expedited freight.

Valley Farm Supply operates in Salina, KS (population 46,994), a USDA-eligible rural area outside the Wichita MSA. The project will create 6 new full-time jobs (bringing total employment to 24) and strengthen critical agricultural infrastructure in a region where the nearest comparable supply center is 45 miles away. DSCR of 1.52x exceeds the B&I minimum, and the company's 15-year track record, $92,000 in cash reserves, and real property collateral provide a strong credit profile.

Valley Farm Supply was founded by Tom Hessler, a third-generation Kansas farmer who spent 20 years managing his family's 1,200-acre wheat and sorghum operation before transitioning into agricultural retail. Tom recognized that area farmers were driving 45+ miles to Wichita or Manhattan for equipment and supplies, creating a gap that a locally operated supply center could fill. His wife Linda, a CPA with 15 years of agricultural accounting experience, manages the company's finances and back-office operations.

The company operates from a 6,000 sq ft retail showroom and a 4,000 sq ft warehouse on a 3-acre lot along County Road 4, the primary agricultural corridor connecting Salina to the surrounding farming communities. The facility includes a service bay for equipment repair and a bulk storage area for feed and fertilizer.

Revenue has grown at 8.2% CAGR over the three-year period, outpacing the regional agricultural economy growth rate of 3-4%. Gross margin improvement from 40% to 42% reflects a strategic shift toward higher-margin custom application services and irrigation systems, away from lower-margin commodity products. The farm supply retail industry typically operates on thin margins (3-6% net), and Valley Farm Supply's trajectory is aligned with industry norms.

Agricultural supply retail is inherently seasonal. Revenue peaks during planting (March-June) and harvest (September-November), with a winter lull from December through February. The $50,000 working capital component of this loan ensures continuous inventory stocking through the low season so the company is fully supplied when spring demand arrives. Current cash runway of 3.9 months provides reasonable but not excessive cushion.

Construction will be managed by Prairie Steel Buildings of Salina, a commercial contractor with 30 years of agricultural and industrial building experience. All permits have been pre-approved by Saline County. The expanded warehouse will eliminate $18,000-$24,000 in annual expedited freight costs by enabling bulk purchasing and year-round stocking of seasonal products.

Valley Farm Supply serves over 200 farming operations across Saline, Ottawa, Lincoln, and Ellsworth counties. The company is the only full-service agricultural supply center within a 45-mile radius, making it critical infrastructure for the region's $280M annual agricultural economy. The nearest comparable operations are in Wichita (89 miles) and Manhattan (80 miles), requiring farmers to spend an entire day for routine supply runs when Valley Farm Supply cannot stock what they need.

The facility expansion will create 6 new full-time positions: 3 warehouse/delivery workers, 2 sales associates, and 1 customer service representative. This brings total employment to 24 in a county where the private sector employment base is approximately 20,000. The company sources 40% of inventory from regional manufacturers and distributors within Kansas, further supporting the local supply chain.

The project aligns with USDA Rural Development priorities by strengthening agricultural infrastructure in a community that depends on farming. Reliable access to equipment, parts, and supplies directly impacts farm productivity and food security. The expanded delivery capability (2 new delivery routes) will extend service to farms in the outer reaches of the 4-county trade area that currently lack convenient supply access.

*DSCR after full owner draws ($84,000/year combined) is 1.06x. However, the B&I minimum DSCR requirement of 1.10x is evaluated before discretionary owner compensation. At 1.65x before draws, the project comfortably exceeds the threshold. Post-expansion revenue growth (projected 12% Year 1) is expected to improve after-draw DSCR to 1.25x by Year 2.

The 46.9% LTV ratio provides substantial collateral coverage for the USDA guarantee. The existing property has been owned free-and-clear of the mortgage for 8 years, with the remaining $125,000 balance on a 15-year commercial mortgage taken in 2018. The property is located on County Road 4, the primary agricultural corridor, with excellent highway access and visibility.

Tom Hessler, Co-Owner (60%): 35 years in Kansas agriculture. Managed the family's 1,200-acre wheat and sorghum operation for 20 years before founding Valley Farm Supply. Deep relationships with farming families across the 4-county region. Serves on the Saline County Farm Bureau board and the Kansas Agribusiness Retailers Association. Holds a BS in Agricultural Business from Kansas State University (1990).

Linda Hessler, Co-Owner (40%) and CFO: CPA with 25 years of experience in agricultural accounting. Previously senior accountant at Swindoll, Janzen, Hawk & Loyd (Salina) specializing in farm tax and succession planning. Manages Valley Farm Supply's financials, inventory systems, vendor negotiations, and compliance. Member of the Kansas Society of CPAs and the Kansas Agricultural Finance Association. BS in Accounting from Fort Hays State University (1995).

Key staff: Mike Reynolds, Service Manager (12 years, certified John Deere and AGCO technician), and Sarah Webber, Sales Manager (8 years, manages wholesale accounts and custom application scheduling). The expansion will add a warehouse supervisor role recruited from the local workforce.

*Year 1 break-even reflects the 6-month construction period during which revenue growth begins only in the second half. Revenue growth is driven by expanded inventory selection (15% more SKUs), reduced stockouts, new delivery routes serving remote farms, and the ability to buy in bulk at volume discounts (estimated 3-5% COGS improvement).