USDA Rural Development

USDA Rural Development

serving the needs of rural America

• Rural Housing Service – single & multi-family

housing

• Rural Utility Service – community facilities &

infrastructure

• Rural Business-Cooperative Service –

USDA Rural Development

DAHMEN BARN – UNION

TOWN

Guaranteed Business & Industry

Loans

• To foster rural employment, B&I provides a

federal guarantee against loss on bank loans up to $10 MM made for business or

commercial purposes in rural areas.

• To determine site eligibility:

• http://eligibility.sc.egov.usda.gov/eligibility/w elcomeAction.do

B&I Types of Assistance

Federal guarantee for lenders on their rural business loans:

• 80% guarantee on loans up to $5 million

• 70% guarantee on loans from $5-10 million

B&I Loan Purposes

• Real estate • Equipment • Refinancing

• Transfers of ownership

• Permanent working capital • Loan fees & costs

USDA Rural Development

OMAK Peppertree Guaranteed Business & Industry Loan

B & I Eligible Businesses

• Retail

• Manufacturing • Wholesale

• Service

• Hotels & motels • Nonprofits

• Nurseries

• Vertically-integrated ag businesses (e.g.

B & I Unique Niche

Commercial investment property

• Retail centers, office buildings, industrial

facilities, etc.

• No owner-occupancy required.

• New construction & renovation projects are

B & I Interest Rates

• Lender’s customary commercial interest rate

– negotiated by lender & business

USDA Rural Development

GordonBrothers Inc. Guaranteed Business & Industry Loan

B & I Term & Payment Structure

Negotiated between lender & business

• Working capital – 7 years maximum

• Equipment – 15 years maximum (not to

exceed useful life of collateral)

• Real estate – 30 years maximum (not to

exceed useful life of collateral)

Structure: Balloons are not permitted.

Reduced payments may be scheduled in the first 3 years

B & I Loan Fees

Lender’s reasonable and customary fees okay – negotiated by lender & business

USDA charges:

• initial guarantee fee equal to 3% of the

guaranteed amount – due prior to issuance of guarantee

• annual renewal fee equal to 1/2% of the

Rural Business Development Grants

• RBDG a competitive grant designed to

support technical assistance, training and other activities leading to the development or expansion of small and emerging private businesses in rural areas

• Activities are separated into enterprise or

Rural Business Development Grants

• Institutions of Higher Education • Federally-recognized Tribes

USDA Rural Development

Rural Business Development Grants

• RBDG funds must be directed for projects

benefitting rural areas or towns outside the urbanized periphery of any city with a

population of 50,000

• No maximum grant amount for enterprise type

grants; however, smaller requests are given

higher priority. grants range from $10,000 up to $500,000. There is no cost sharing requirement.

• Opportunity type grant funding is limited to a

Rural Business Development Grant

to benefit small and emerging businesses in rural areas uses may include:

• Training & technical assistance, project planning,

business counseling/training, feasibility studies,

• Capitalization of revolving loan funds including funds

that will make loans for start-ups and working capital

• Distance adult learning for job training and

advancement

• Rural business incubators

Rural Business Development Grants

• Opportunity type grant funding must be used

for projects in rural areas and they can be used for:

• Community economic development

• Technology-based economic development • Feasibility studies and business plans

• Leadership and entrepreneur training • Rural business incubators

USDA Rural Development

Local grocery store, Business Center, LaCrosse Community Pride

Rural Economic Development Loan &

Grant

• The Rural Economic Development Loan (REDL)

and Grant (REDG) programs provide funding to rural projects through local utility organizations.

• USDA provides 0% interest loans to local

utilities which in turn, pass through to local

businesses (ultimate recipients) for projects that will create and retain employment in rural areas.

• The ultimate recipients repay the lending utility

Rural Economic Development Grants

• USDA provides grant funds to local utility

organizations which use the funding to establish revolving loan funds (RLF).

• Loans are made from the revolving loan

funds to projects that will create or retain rural jobs. Intermediaries may use Rural Economic

• Grant funds are for projects in rural areas or

Rural Economic Development Grant

• Eligible Applicants

• Any former Rural Utilities Service (RUS)

borrower who borrowed, repaid or pre-paid an insured, direct, or guaranteed loan

• Nonprofit utilities that are eligible to receive

assistance from the Rural Development

Electric or Telecommunication Programs; or

• Current Rural Development Electric or

USDA Rural Development

Rural Economic Development Loan

Grant

• Eligible Uses:

• Business incubators

• Community development assistance to

nonprofits and public bodies (particularly job creation or enhancement)

• Facilities and equipment for education and

training for rural residents to facilitate economic development

• Facilities and equipment for medical care to

Rural Economic Development Loan

Grant

• Start-up venture costs, including, but not

limited to financing fixed assets such as real estate, buildings (new or existing),

equipment, or working capital

• Business expansion • Technical assistance

Rural Economic Development Loan

Grant

• Up to $300,000 in grants may be requested

for establishment of the RLF

• Up to 10% of grant funds may be applied

toward operating expenses over the life of the RLF

Community Programs

• Water and Environmental Programs

• Funding for construction of water and waste

facilities for infrastructure of rural

communities with populations of 10,000 or less.

• WEP provides funding to organizations that

provide technical assistance and training to rural communities in relation to their water and waste activities.

USDA Rural Development

City of Goldendale Wastewater treatment plant

Community Facilities

• Provides affordable funding to develop essential

community facilities in rural areas.

• An essential community facility is defined as a

facility that provides an essential service to the local community

• Eligible borrowers include: • Public bodies

• Community-based non-profit corporations • Federally-recognized Tribes

Community Facilities

• What kinds of funding are available? • Low interest direct loans

• Grants

• A combination of both, as well as our loan guarantee program.

• 90% Guarantee • 1% initial fee

USDA Rural Development

State Contacts

• Brian Buch, Business & Cooperatives Program

Director 360-704-7707 email:

[email protected]

• Roni Baer, Business & Cooperatives Program

Specialist 509-454-5743, Ext. 134 email:

[email protected]

• Carlotta Donisi, Business & Cooperatives

Program Specialist 360-704-7724 email: