Guaranteed
Business and Industry (B&I) Loans
The B&I program is an incentive program to lenders to make
loans to businesses that will result in sustainable jobs in rural
areas.
Eligible lenders
All State or Federally chartered banks, savings banks, savings and
loan associations, credit unions and Farm Credit System institutions.
Other commercial lenders may apply to be approved as a non-traditional
lender.
Eligible applicants
Proprietorships, corporations, partnerships, cooperatives, public
bodies and non-profits. Must be engaged in or proposing to engage
in a business. Charitable, educational or religious organizations
are ineligible.
Eligible loan purposes
Purchase of a business, land, buildings, equipment, working capital,
and refinancing.
Eligible types of businesses
Most businesses located in rural areas are eligible. No golf courses,
no race tracks, no gambling, no owner occupied housing and no projects
eligible for the agency's Rural Rental Housing Programs - no lines
of credit.
Eligible areas
Rural areas include all territory of a State that is not within
the outer boundary of any city having a population of 50,000 or
more and is not within an area that is urbanized or urbanizing as
defined in the regulations. In West Virginia, ineligible areas for
assistance are mainly Charleston and Huntington. Interest rates
and terms are negotiated between the lender and borrower and reviewed
by Rural Development.
Terms cannot exceed the useful life of the assets being financed.
They may be either fixed or variable and not more than those rates
customarily charged borrowers in similar circumstances in the ordinary
course of business and are subject to Agency review and approval.
Loans of up to $10 million can be guaranteed. In some instances,
the Rural Business Program Administrator may grant a waiver to make
loans up to $25 million.
Guarantee percentages are up to 80% for loans to $5,000,000, up
to 70% for loans over $5,000,000 to $10 million, and 60% for loans
over $10 million. Lenders and borrowers propose the percentage of
guarantee. The Agency determines the percentage of guarantee after
considering all credit factors involved, including but not limited
to borrower's management, collateral, financial condition of the
borrower, lender's exposure before and after the loan, and current
trends and economic conditions.
Equity
At least 10% tangible balance sheet equity position at the time
the Loan Note Guarantee is issued for existing businesses. At least
20% for new businesses. Tangible balance sheet equity will be determined
in accordance with Generally Accepted Accounting Principles. Cannot
include appraisal surplus or subordinated debt. The Agency may require
higher equity requirements if conditions warrant.
Collateral
Collateral must have documented value sufficient to protect the
interest of the lender and the Agency. The discounted collateral
value will normally be at least equal to the loan amount. Personal
guarantees from owners or major stockholders will usually be required.
Guarantee fee
2% of the guaranteed portion of the loan, payable at the time the
guarantee is issued.
Loans up to $5,000,000 are reviewed and approved in State. Higher
amounts are reviewed and approved in Washington, DC.
Filing an application
Applications are filed on behalf of the business by the lender.
The business completes their part of the application and forwards
it to the lender. Preapplications can also be filed by applicants
and lenders who wish to obtain Agency comments before completing
an application. Application forms can be obtained at any Rural Development
office or on line through the USDA eForms website. Click on RD Instruction
4279-B for specific instructions on the program.
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Intermediary
Relending Program (IRP) Loans
The IRP is a revolving loan program where Rural Business Programs
lends a non-profit organization or public entity money at 1% for
30 years. The borrower then relends the funds to eligible businesses
at a reduced rate.
Eligible applicants
Cooperatives, public entities, indian tribal groups and non-profits.
A successful history of operating a revolving loan fund and a staff
with experience in lending are very desirable.
Eligible loan relending purposes
As determined by intermediary's work plan, but may include: purchase
of a business, land, buildings, equipment, working capital, lines
of credit, and refinancing.
Eligible types of businesses
Most businesses located in rural areas with a population of 25,000
or less are eligible. Some ineligible types are golf courses, race
tracks, gambling, farms, charitable institutions, lending, investment
or insurance companies, and community cable TV.
Terms, interest rates, and amounts
Initial loans to intermediaries cannot exceed $750,000. However,
applicants should restrict their request to an amount that can be
relent within 12 months. Subsequent applications for up to $750,000
annually can be filed by intermediaries who are successful in relending
all of the initial loan amount.
Loans to businesses can be up to $150,000 and no greater than 75%
of project cost. The interest rate to the business is set by the
intermediary. Terms cannot exceed the useful life of the assets
being financed The business must be unable to obtain funds from
another source.
Collateral
Rural Business Programs will secure its loan to the intermediary
with a pledge of the assets now in or hereafter placed in the IRP
revolving fund.
Collateral for loans to the businesses must have documented value
sufficient to protect the interest of the lender and the Agency.
Personal guarantees from owners or major stockholders will usually
be required.
Filing an application
The IRP program is authorized nationwide. Applications are filed
with the West Virginia Rural Development State Office. Application
forms can be obtained at the Rural Development State Office or on
line through the USDA eForms website. Click on RD Instruction 4274-D
for specific instructions on the program.
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Rural
Business Enterprise Grants (RBEG)
Rural communities can receive assistance in promoting the development
of small businesses through the Rural Business Enterprise Grant
(RBEG) program. Grants are made to public bodies or not-for-profit
organizations. Grantees use the funds to promote the development
of small private businesses, which are defined as having 50 or fewer
new employees and less than $1 million in projected annual gross
revenue. Rural communities include cities, towns, or unincorporated
areas with up to 50,000 population.
Eligible applicants
Public entities, indian tribal groups and non-profit corporations.
Eligible use of funds
Funds can be used to acquire property, buildings, machinery or equipment
which will be owned by the grantee, but will be made available for
use by the private business or businesses. Grantees can also use
funds to provide technical assistance to private business enterprises,
make loans for startup operating costs or working capital or to
establish a revolving loan fund. Reasonable fees for professional
services necessary for planning and development of the project and
training in connection with technical assistance can also be eligible.
Amounts
The size of grants is restricted by the availability of funds and
the demand as demonstrated by the number of applications filed.
Smaller applications of $100,000 or less will receive somewhat higher
priority.
Filing an application
Applications are filed with the West Virginia Rural Development
State Office. Application forms can be obtained at the Rural Development
State Office. Click on RD Instruction 1942-G for specific instructions
on the program.
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Rural
Cooperative Development Grants (RCDG)
The program provides grants for establishing and operating centers
for cooperative development. The primary purpose is to improve economic
conditions in rural areas, including cities of up to 50,000 population.
Grant funds can pay up to 75% of the costs for establishing and
operating such centers. Grants may be made to public bodies or not-for-profit
institutions.
An announcement setting priorities and inviting applications is
published annually in the Federal Register. Applications are filed
with the State Rural Development office.
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Rural
Business Opportunity Grants (RBOG)
Rural Business Opportunity Grants (RBOG) are available to promote
sustainable economic development in rural communities with exceptional
need.
Eligible rural areas
Eligible rural areas exclude any area that is within the boundaries
of a city with a population in excess of 50,000 inhabitants, according
to the latest decennial census.
Eligible applicants
Public entities, Indian tribal groups and non-profit corporations
or cooperatives composed primarily of rural residents that conduct
activities for the benefit of the members.
Eligible use of funds
Grants will be used to provide technical assistance for business
development and economic development planning.
Limitations
Projects are expected to be completed within 2 full years. The grants
cannot be used to finance real estate development or buildings.
Amounts
A grant may be considered for the amount needed to assist in the
completion of the proposed project within 2 years. For fiscal year
2004, the maximum grant was capped at $50,000.
Filing an application
Applications are filed on Standard Form 424.1, "Application for
Federal Assistance (for nonconstruction)." The application
must include a written narrative that provides detail on the project,
the area it will serve, businesses to be assisted, need for the
project, the applicant's demonstrated capability and experience
in providing the proposed assistance, and other factors that allow
Rural Development to evaluate the proposal. The applicant must propose
a method by which the effectiveness of the project will be evaluated
and how it will serve as a "best practice" for other rural communities.
Projects compete nationally for funding based on a priority score
described in the regulations.
Application forms can be obtained at the Rural Development State
Office. Click on RD Instruction 4284-G for specific instructions
on the program.
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Section
9006- The Renewable Energy and Energy Efficiency Program
The Renewable Energy and Energy Efficiency Program, offers grants
and guaranteed loans to help farmers, ranchers, and rural small
businesses purchase renewable energy systems and make energy efficiency
improvements.
Eligible applicants
Farmers, ranchers, and rural small businesses with a demonstrated
financial need are eligible for this program. Farmers and ranchers
must directly engage in the production of agricultural products
and obtain at least 50% of their gross income from their agriculture
business.
Rural small businesses must meet the definition of a small business
according to the SBA (Small Business Administration) standards and
be headquartered in a rural area. SBA small size standards can be
found at http://sba.gov/size/13cfr121.html . The private entity
may include a sole proprietorship, partnership, corporation, and
a cooperative. However, non-profit organizations and public entities
are not eligible for this program.
Renewable energy projects
Projects that fall under this category are projects that involve
a process to produce renewable energy. Grants available for this
project may not be less than $2,500 nor exceed $500,000. The grant
money may not exceed 25% of total project costs. The maximum guaranteed
loan under this program is $10,000,000, which may not exceed 50%
of total project costs. An energy audit is not required for these
projects. Categories for these projects include: Biomass, Anaerobic
Digester, Geothermal – electric generation, Geothermal –
direct use, Hydrogen, Small and Large Wind, finally Small and Large
Solar.
Energy efficiency projects
Projects that fall under this category are improvements that reduce
energy consumption. The minimum grant available for this type of
project is $2,500, and the maximum is $250,000. The grant money
may not exceed 25% of total project costs. The maximum guaranteed
loan under this program is $10,000,000, which may not exceed 50%
of total project costs. An energy audit is required for all energy
efficiency projects. All projects must be verified by this energy
audit or assessment.
Filing an application
Applications are filed with the Rural Development State Office.
Application forms can be obtained at the Rural Development State
Office or at www.rurdev.usda.gov/rbs/farmbill/index.html. The applications
are filed once a year. The target date for announcement that applications
will be accepted and 4280-B regulations to be published is May 2005
in the Federal Register.
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Cooperative
Stock Purchase Program
The Rural Cooperative Stock Purchase Program works in conjunction
with the Guaranteed Business and Industrial (B&I) loan program
allowing loans to be made to producers of agricultural products
seeking to join new cooperatives that produce value-added goods.
Family farmers can use the B&I loan program to help pay for
stock in a start-up cooperative that will process an agricultural
commodity into a value-added product.
Other criteria
The co-op must be a new cooperative venture, not an expansion or
diversification of an existing co-op. The producer must be a family-size
farmer, as defined by the Farm Service Agency.
For more information
More information about the Cooperative Stock Purchase Program can
be obtained by contacting John M. Comerci, RBS Specialist, at 304/252-8644,
extension 146.
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Cooperative
Development
Cooperative Programs provide a wide range of assistance for people
interested in forming new cooperatives. This help can range from
an initial feasibility study to the creation and implementation
of a business plan.
Cooperative Programs also provide technical assistance to existing
cooperatives facing problems or challenges. Technical assistance
could include helping a cooperative develop a strategic marketing
plan, making a crucial decision about merging or forming a joint
venture with other cooperatives, or improving its business structure
and operating efficiency.
For more information
More information about Cooperative Development assistance can be
obtained by contacting the Rural Development State Office or John
M. Comerci, RBS Specialist, at 304/252-8644, extension 146.
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Rural
Economic Development Loans and Grants (REDLG)
Loans or grants under the REDLG programs are available only to
rural electric cooperative or telephone borrowers of Rural Utilities
Programs. The programs are intended to help these utilities promote
economic and community development projects within their service
areas.
Eligible applicants
Eligible applicants must be an entity which has an outstanding Rural
Utilities Programs and/or Rural Telephone Bank (RTB) loan or loan
guarantee for an electric or telephone purpose under the provisions
of the Rural Electrification Act of 1936, as amended.
Type of assistance
The applicant receives either a zero-interest loan or a grant. Grants
are available only for purposes of establishing a revolving loan
fund. Funds are used by the applicant or passed through to another
entity which will own or undertake the project.
Amount of assistance
The minimum loan or grant is $10,000. The maximum loan or grant
is determined annually based on the amount of funds available. Currently
the maximum loan is $740,000 and the maximum grant is $300,000.
Terms
Zero-interest loans will normally be repaid over the same period
of time as set for any pass-through loan and will depend on the
nature of the project. Normally, the period will not exceed 10 years.
Any pass-through loans must also be made at zero percent interest.
The applicant can charge reasonable fees to the project.
Filing an application
Applications are filed with the West Virginia Rural Development
State Office. The application will be processed by Rural Development
and a priority score developed for the application based on the
factors set forth in the regulation. Funding must be requested from
the Rural Business-Cooperative Programs office in Washington. They
will fund applications according to the highest priority scores
on a quarterly basis. Application forms and further information
can be obtained at the Rural Development State Office.
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1890
Land Grant Colleges and Universities Initiative
Eligible applicants
Through Cooperative agreements, 1890 institutions are eligible to
receive USDA Rural Development funding to establish economic development
programs for their neighboring communities.
Rural Business Entrepreneurship Development
Initiative
The Rural Business Entrepreneurship Development Initiative is designed
to encourage 1890 institutions to establish and promote business
entrepreneurship as a viable occupational alternative for students
in all academic disciplines. It is also designed to promote entrepreneurial
practices with cooperatives and other businesses located in underserved
communities.
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Value-Added Producer Grants (VAPG)
Eligible applicants
Eligible applicants are independent producers, farmer and rancher
cooperatives, agricultural producer groups, and majority-controlled
producer-based business ventures.
Uses of Funds
Grants may be used for planning activities and working capital for
marketing value-added agricultural products and for farm-based renewable
energy. The maximum amount that can be awarded is $500,000, and
all VAPG funds must be matched by an equal amount of funds from
the applicant or a third party.
Value-Added Products Defined:
1.) Changing the physical state or form of the agricultural product
2.) Physically segregating an agricultural product or commodity
in a manner that results in the enhancement of the value of the
product or commodity
3.) Producing an agricultural product or commodity in a manner that
enhances its value
4.) Value added also includes using an agricultural product or commodity
to produce renewable energy on a farm or ranch
Filing an application
More information may be obtained on the Rural Development website:
www.rurdev.usda.gov/rbs/coops/vadg.htm
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Programs & Services
