USDA RURAL DEVELOPMENT

1
USDARURAL DEVELOPMENT

• Rural Business-Cooperative
• Service Programs

2
Opportunities In Your Rural Community

• BI Loan Guarantee
• Rural Business Enterprise Grants
• Intermediary Relending Loans
• Cooperative Development Grants
• REDLoans/Grants
• Cooperative Services
• Value Added Grants
• Renewable Energy Grants Loan Guarantees

3
Rural Area Definition

• Relates to all programs.
• Must be located outside a city of 50,000 or more
  and the adjacent contiguous urbanized area
  surrounding that city.
• Must be separated from an ineligible city and
  its surrounding urbanized area by a definite
  rural break.

4
Business Industry

• Guarantees of up to 80 on loans not exceeding
  10 million in rural areas outside a city with a
  population of 50,000.
• Purpose - Provide jobs and economic development
• Guarantees Average Between 1 - 2 Million

5
Maximum Loan Amount

• Maximum loan amount is 10 million. However, the
  Administrator may approve a loan up to 25
  million for certain high impact/high priority
  projects.
• Percentage of guarantee depends on loan amount

6
Maximum Repayment Terms

• Loans for multiple purposes and/or combination of
  collateral may use blended terms.

7
Fees and Charges

• Two types of non-refundable fees
• Initial Guarantee Fee - 2 of the guaranteed
  portion of the loan paid when the guarantee is
  issued.
• Annual Renewal Fee Rate is established by RD in
  an annual notice published in the Federal
  Register. For loans obligated and closed in FY
  2008, rate is 1/4 multiplied by the principal
  balance of the guaranteed portion of the loan as
  of 12/31 of each year.

8
Eligibility Requirements

• Collateral Lender will discount collateral in
  accordance with banks normal policies.
• Discounted value of collateral must be, at least,
  equal to the loan amount
• Typical discounted collateral
• Real Estate - 80
• Equipment depends
• Inventory 60 or less
• Receivables - 50 or less

9
Tangible Balance Sheet Equity

• Regulations require minimum TBSE at closing
• 10 for existing businesses
• 20 for new businesses
• Must be calculated from a balance sheet prepared
  in accordance with GAAP
• Assets valued at cost less depreciation
• No appreciated market value on balance sheet
• Intangible assets must be subtracted from the
  calculation. Ex. patents, franchises, loan
  costs, loans to owners. Typically included as
  Others Assets

10
Borrower Profile

• Acceptable Personal/Corporate Credit History
• Must Show Evidence Of Management Ability
  To Successfully Operate The Business
• Repayment Ability (Debt Service Coverage)
• Adequate And Acceptable Collateral To Secure The
  Loan

11
Eligible Lenders

• Banks
• Insurance Companies with lending experience
• Non-traditional Lenders (subject to RD approval)
• Other regulated lenders eg. Farm Credit

12
Benefits to the Customer

• No balloon payments/fully amortized loans
• Possibly longer terms
• Possibly lower interest rate and/or fixed rate

13
Eligible Purposes

• Real Estate purchases improvements
• Equipment, inventory
• Working Capital term loans only
• Debt Refinancing when necessary to improve cash
  flow. Existing lender debt
• Business Acquisition when necessary to save or
  increase jobs.

14
B I Loan Eligibility And Approval
Process

• Applicant identifies a lender.
• Borrower submits business plan/info.
• Lender contacts RD to discuss the project.
• Lender/Borrower jointly prepare appropriate
  forms. Lender spreads and analyzes.
• Lender submits application.
• RD completes Analysis, EA, SLC approval.
• Conditional Commitment 6 working days later.

15
(No Transcript)
16
(No Transcript)
17
Rural Business Enterprise Grants

• To facilitate the growth of small and emerging
  businesses
• Eligible areas are outside cities, towns with
  populations of 50,000 or more
• Eligible purposes are R.E. acquisition,
  construction, machinery, equipment,
  infrastructure, RLF, TA
• Only for public bodies non-profits

18
(No Transcript)
19
Intermediary Relending Program

• Provide loans for funding revolving loan programs
  in rural areas
• To public bodies and non-profit organizations
• Terms - 30 years
• Rates - 1

20
IRP Loans to Ultimate Recipients

• Maximum loan - 150,000
• UR must provide 25 match
• UR must be outside a city or town of 25,000 or
  more
• No agricultural production, gambling or racetracks

21
Value Added Producer Grants

• Purpose To promote the increase in the
  percentage of the consumer dollar realized by the
  producer of the agricultural product.
• Eligible applicants are producers or groups of
  producers.
• Must add value to a product or enter a new and/or
  expanded market.
• A portion of the funds will be used to create
  value added innovation centers.
• Guidelines will be published in Federal Register

22
Cooperative Development Grants

• To finance the establishment and operation of
  centers for cooperative development and
  assistance
• Eligible applicants are non-profits, Indian
  Tribes
• Applications may be submitted to the State Office

23
Rural Economic Development Loans

• To finance rural economic development and job
  creation projects. Loans are made to RUS
  electric and telephone borrowers
• Loans are made to finance a variety of projects
  including for profit businesses. Loans may be
  passed through to the UR
• Max term 10 years _at_0. May charge up to 1 for
  servicing.

24
Renewable Energy Grants Loan Guarantees

• Eligible Recipients are Ag. Producers Rural
  Small Businesses
• Grants up to 500,000 L/G up to 10,000,000
• Solar, Wind, Biomass, Geothermal, Hydrogen
• Application window is announced in the Federal
  Register.

25
(No Transcript)
26
(No Transcript)
27
Funding Levels

• FY 2009

28
FY 2009 Funding

• BI Guarantees 30,532,000 FL
• 5,000,000 USVI
• RBEG 606,000 FL
• 50,000 USVI RBOG 684,000 NA
• IRP Loans 35,000,000 NA
• RED Loans 19,000,000 NA
• VAPG 14,000,000 NA
• Renewable Ener. 204,000,000 NA

29
Regulations, Forms Guides

• Available from the internet at
  http\\www.rurdev.usda.gov/rbs or by calling or
  writing any Rural Development office.
• Windows based forms software is available for BI
  guarantee program.
• Joe.mueller_at_fl.usda.gov

30
Contact Information

• Joe Mueller
• Susan Campbell
• Bruni Robles
• 352-338-3482
• Joe.mueller_at_fl.usda.gov
• Susan.campbell_at_fl.usda.gov
• Brunilda.robles_at_fl.usda.gov