A proposed guaranteed operating loan for $100,000 with a second lien on livestock is allowed if there is an outstanding direct loan of $70,000. Is this statement true or false?

The statement is true because guaranteed operating loans can be structured to support existing debts, provided they meet certain criteria. In this scenario, the guaranteed operating loan of $100,000 with a second lien on livestock becomes permissible as the borrower already has an outstanding direct loan of $70,000. The U.S. Department of Agriculture (USDA) guidelines allow for such loans when there is existing eligibility and sufficient collateral backing the new loan. The presence of the second lien on livestock enhances the security for lenders while adhering to regulatory frameworks, thus providing opportunities for farmers to access additional capital for operations despite existing loan obligations. This approach facilitates the financial stability of agricultural enterprises by ensuring that farmers can obtain necessary funding while managing their debt levels responsibly.