Presentation: USDA
Rural Development Community Programs Guaranteed Loans
USDA Rural Development
Increase economic opportunity and improve the quality of life
in rural communities.
Community Programs
- Programs designed to develop essential community facilities
and services for public use in rural areas.
- Schools, libraries, child care, hospitals, clinics, assisted
living facilities, fire and rescue stations, police stations,
community centers, public building, etc.
CF GUARANTEED LOANS
- Rural Development’s Community Facilities Guaranteed Loan
program partners with lending institutions to provide loans for
essential community facilities.
- A guaranteed loan is often made in combination with a direct
loan, but can also be made alone.
Funding Available for Guaranteed Loans - Fiscal Year 2007
- $219 million Guaranteed Loan authority
- $187 million allocated to RD State Offices
- $32.5 million National Office reserve
ELIGIBLE ORGANIZATIONS
- Public Bodies
- Federally Recognized Indian Tribes
- Non-Profit Corporations
Eligible purposes
- Construction
- Expansion
- Renovation and improvements
- Equipment and vehicle acquisition
PERCENT OF GUARANTEE
- The Guarantee is negotiated between the lender and the agency.
- The maximum guarantee is 90%.
- The lender must retain 5% of the total loan from the unguaranteed
portion.
GUARANTEED LOAN FEE
- $1,000,000 loan request
- 90% guarantee
- One percent Fee
- $1,000,000 * 90% = $900,000
- $900,000 * .01 = $9,000
INTEREST RATES
- Negotiated between lender and borrower
- Can be fixed or variable
- Customarily rate charged to other borrowers in similar circumstances
in the ordinary course of business.
LOAN TERMS
- Limited to useful life of facility.
- Not to exceed 40 years.
- Balloon payments prohibited.
- Subject to State/Local Laws
Benefits to the Lender
- May be sold on the secondary market
- 90 % Guarantee - protected against loss by Federal guarantee
- Excellent public relations in community
- Satisfies Community Reinvestment Act requirements
- Lenders use own forms, loan doc, & security instruments.
Benefits to Borrower
- Flexible terms
- Abundance of funds & limited direct funds
- Leveraging encouraged
- Guarantee up to 100% of project costs
- Only Game in Town
- No maximum loan limit
- USDA charges only a 1% guarantee fee
- No annual renewal fee
Application Process
- Lender & borrower submit pre-application
- Field visit to project site
- Lender & business submit complete application
- USDA credit analysis, evaluation, and environmental assessment
- Obligates guaranteed authority and issues Conditional Commitment
- Lender completes construction/interim financing arrangements.
- Development work is completed and facility is operational
- Lender closes loan and request the guarantee.
- USDA issues Loan Note Guarantee after verifying conditions met.
Distribution of CF Guaranteed Loan Portfolio
- Health Care: 59%
- Fire, Rescue, and Public Safety: 2 %
- Cultural and Educational: 14%
- Recreational Activities: 5%
- Energy Transmission & Distribution: 0%
- Public Buildings and Improvements: 13%
- Industrial Development: 0%
- Other Facilities: 7%
HEALTH OF THE CF GUARANTEED LOAN PORTFOLIO
- 2.5% Delinquency Rate (10 CF Projects)
- 97.5% Current Loans (561)
- TOTAL OUTSTANDING GUARANTEED LOAN PORTFOLIO: $545,579,645.68
(As of 4/6/07)
http://www.rurdev.usda.gov/recd_map.html
Joseph Ben-Israel
Phone: 202-720-1505
E-mail: Joseph.benisrael@wdc.usda.gov
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