USDA Rural Development
Business Programs
Business Programs
Business & Industry Guaranteed Loans
Revolving Loan Fund Programs
Energy Programs (REAP)
Rural Business Development Grant
(RBDG)
Eligible Locations
Rural Area – Anywhere except within the boundaries of a city or town with more than 50,000 inhabitants or the urbanized area of that city or town
Eligibility can be determined at the following Web site:
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAc tion.do
B&I Guaranteed Loan Program
The Business and Industry (B&I) Guaranteed Loan
Program is a loan guarantee program designed to assist credit-worthy rural businesses to obtain needed credit for most any legal business purpose.
Bolster the existing private credit structure through the guarantee of quality loans that provide lasting community benefits
Not intended for marginal or substandard loans or relief of lenders having such loans
Eligible Borrowers
Any legal entity, including, corporations,
partnerships, and cooperative organizations; Federally recognized tribal group, public
body; or individual engaged in or proposing to engage in a business
Can assist both For-profit and Non-profit entities
Types of Businesses Financed
Manufacturing Wholesaling Retailing
Service oriented businesses *Project must be in eligible areas
Loan Purposes
Real estate purchase and improvements Machinery and equipment
Long term working capital
Debt refinancing – under certain conditions Business expansion
Ineligible Borrowers / Purposes
Charitable institutions
Churches or church-controlled organizations Fraternal organizations
Lending and investment institutions Insurance companies
Businesses engaged in illegal activity Golf courses
Ineligible Borrowers / Purposes
(Cont.)
Lines of credit Lease payments
Guarantees of loans made by other Federal agencies
Distribution of payment to an owner, beneficiary, or a close relative of the owner, when an owner will retain an ownership interest
Benefits for the Borrower
Greater access to credit
Ability to fund a project
Potentially longer repayment terms,
with improved cash flow
Benefits for the Lender
Credit enhancement
Established secondary market can
enhance Lender’s liquidity and increase
yields
Exclusion of the guaranteed portion
from legal lending limits
Assists banks in meeting CRA
requirements
Leveraging
The USDA B&I Guaranteed loan can be
combined with other State and Federal loan and grant programs
Business & Industry
% of Loan Guaranteed • 80% on loan amounts up to $5 million
• 70% on loan amounts up to $10 million • 60% on loan amounts up to $25 million
Fees • One-time guarantee fee of 3% of the guaranteed amount
• Annual renewal fee of 0.50%
Community size • Population up to 50,000
Borrower Types • Any legal entity, including non-profit organizations
• New or existing businesses
Loan Amounts • Up to $25 million (subject to annual notice) Loan Uses • Real estate purchase and improvements
• M&E acquisition • Working capital • Debt restructuring • Business acquisition
Business & Industry
Max Loan Terms RE - 30 years, M&E – 15 years, WC – 7 years Personal / Corporate
Guarantees
Required from individuals and entities with 20% or more ownership
Tangible Balance Sheet Equity
10% required for existing entities 20% required for new entities
Collateral Requirements Minimum 1:1 after discounting
Advance Rates RE 80% (Customary Agency rates) M&E 70%
Inventory 60% A/R 60%
Environmental Review Process
Should be initiated as early as possible with RD office
Differences between
B&I and SBA 7(a)
USDA B&I SBA 7 (a)
Non-Profits Yes No Investment RE Yes No Revolving Line of Credit No Yes Collateral Deficiency No Yes SBA Size Standards No Yes
Location Under 50,000 population All locations
Max Loan Amount $25 million $5 million
% of Guarantee < $5 million: 80%
$5 – $10 million: 70%
< $150,000: 85% $150,000 – $5 million: 75%
Business Projects
DeVilbiss Healthcare
$3.6 million Business & Industry Loan Guarantee
Revolving Loan Fund Programs
Intermediary Relending Program (IRP)
Rural Microentrepreneur Assistance Program (RMAP)
Intermediary Relending Program
(IRP)
USDA makes a direct loan to an Intermediary (non-profit) to establish a revolving loan fund. The Intermediary will relend the money to fund
Intermediary Relending Program
(IRP)
Max Loan Amount (RD to Intermediary)
$1,000,000
Terms 30 year loan at 1% fixed interest rate
Max Loan Amount Intermediary may lend from the
revolving loan fund
$250,000 or 75% of the total cost, whichever is less
Typical eligible projects
Rural Microentrepreneur Assistance
Program (RMAP)
USDA makes a direct loan to an Intermediary (non-profit) to provide direct loans and grants to micro businesses.
The Intermediary is also eligible to receive technical assistance grants to provide
assistance and training to small business owners.
Rural Microentrepreneur Assistance
Program (RMAP)
Max Loan Amount (RD to Intermediary)
$500,000
Terms 20 year loan at 2% fixed interest rate
Loan to Small Business $50,000 max
Terms of 10 years or less
Typical Eligible Projects Business must be rural and have <10 employees
M&E acquisition, WC, FF&E, refinancing, business acquisition
Grant Not to exceed 25% of the loan amount
Intermediary is required to provide a 15% match
Rural Energy for America Program
(REAP)
Grants and guaranteed loans for Renewable Energy Systems (RES) and Energy Efficiency Improvements (EEI) projects
Eligible for agricultural producers and rural small businesses (must be for-profit)
Rural Energy for America Program
(REAP)
Eligible RES Projects Biomass, wind, solar, geothermal, hydroelectric
Eligible EEI Projects Grain dryers, irrigation power units, lighting, refrigeration, HVAC, insulation, replacement of existing system
Grants Up to 25% of eligible project costs RES max grant amount of $500,000 EEI max grant amount of $250,000 Loan Guarantees Up to 75% of eligible project costs
Can be combined with grant (50% loan guarantee, 25% grant)
Business Projects
Mahoning Creek Hydroelectric Company $7.5 million REAP Loan Guarantee
Rural Business Development Grant
(RBDG)
Program combined Rural Business Enterprise Grant and Rural Business Opportunity Grant Ensure continued investments in rural
businesses
Designed to assist the start up or expansion of small and emerging private businesses and/or nonprofits in rural areas.
Rural Business Development Grant
(RBDG)
Eligible Applicants
Public Bodies
Government Entities
Native American Tribes Non-Profit Organizations
Rural Business Development Grant
(RBDG)
Eligible Purposes
Acquire or develop land Buildings
Machinery and equipment
Build or improve access roads Provide technical assistance
Support rural distance learning programs that provide education or job training