Transcript Rural Developments Business & Cooperative Programs

USDA / Rural Development’s
Business & Cooperative Programs
Vernita Dore
Area Director
William Furman
Area Specialist
Rural Development
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Rural Housing: Single Family (20,000)
Rural Housing: Multi-Family (20,000)
Community Facility* (20,000)
Rural Utilities (10,000)
Rural Business* (50,000)/(25,000-IRP)
Cooperative Services (N/A)
Funding Sources
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Grants
Direct Loans
Guaranteed Loans
Business & Cooperative Programs
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Business & Industry Guaranteed Loans *
Rural Business Enterprise Grants *
Intermediary Relending Program Loans *
Rural Economic Development Loans & Grants *
Rural Cooperative Development Grants
Value Added Producer Grants *
Rural Business Opportunity Grants*
Renewable Energy & Energy Efficiency Grants and Loans *
Cooperative Services*
Small Minority Producer Grants
Biomass Research and Development Initiative
1890 Land Grant Universities
Farm Bill New Programs?????
Business & Cooperative Programs
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Objectives: Create jobs and stimulate rural
economies by providing financial backing
through grants, direct loans & loan
guarantees.
Beneficiaries: Commercial lenders, local
residents, businesses, local governments,
non-profits, educational institutions,
economic developers, farmers, cooperatives,
etc.
Population Requirements
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Most all of the Business & Cooperative Programs
are eligible in rural areas except those cities that
exceed 50,000 in populations. (Columbia, Greenville,
Charleston)
Intermediary Relending Programs (IRP): 25,000
Value Added Producer Grants (VAPG): Statewide
http://eligibility.sc.egov.usda.gov/eligibility/welcomeA
ction.do
Business & Industry Guaranteed Loan
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Private sector financing
Guarantee marketable
Improved terms (7/15/30)
Bank loan forms our application
Bank serviced and over site
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Federal or State Chartered lending Institutions, Credit Unions, Savings
& Loan Associations, Mortgage Companies that are part of a bank
holding company, Insurance Companies regulated by state or federal
agency, other lenders that apply for approval and meet the regulatory
requirements.
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Community Reinvestment Act (CRA) credit
Does not count against lending limits to borrower
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Tri-Country Cotton Growers, LLC. B&I Guaranteed Loan
for $2,500,000. Williamsburg County, SC. For
Restructure and Refinance Debt.
Ganesh Inc. B&I Guar. Loan, $1,280,000. Clarendon
County. Construction of Holiday Inn Express.
Applicants/Application
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Eligible credit worthy borrowers
Apply through lender and Rural Development Area
Office
Uses of Loan Funds
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Acquisitions and Start Ups
Real Estate
Construction
Machinery & Equipment
Permanent Working Capital
Refinance
Inventory
Agri-Business, Aquaculture, Commercial Fishing,
Commercial Nurseries, Forestry, Hydroponics,
Tourist & Recreational facilities (excluding Golf Courses)
Housing Developments (must show need for housing to
save jobs)
Commercial Developments
Renewable Energy & Energy Efficient projects
Etc.
Loan Guarantee
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90%-80% for loans $5 million or less
70% for loans > $5 million < $10 million
60% for loans > $10 million
State approval authority $7.5 million or less
Administrator approval at $25 million or less
Secretary approval at $25 million or higher
for value added processing cooperatives
Terms & Conditions
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Terms:
30 years for real estate,
15 years machinery & equipment
7 years for working capital, inventory, & accounts
receivable
Rates:
Set by lender-can be fixed or variable adjusted no
more that quarterly with a national published factor
1/4% annual servicing fee charged on outstanding
principal balance
Fees
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1-2% Guarantee fee on the guaranteed amount
depending on location. Limited amount of 1% fees
available
Normal lending fees including but not limited to
origination and finance fees, professional services
such as appraisals, engineering, accountants,
packagers, attorneys, and others.
Credit Guidelines
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Cash Flow: +1.25 : 1.0(debt service)
Collateral: 80%RE, 70%M&E, 60% Inv/AR
Industry: Successful
Equity: 10-20%+
Personal & Corporate Guarantees: 20% >
Lien Priority: same for Lender & USDA
Management: Experienced
Business plan for existing business
Feasibility Studies: Start-ups (financial, economical,
technical, managerial, market)
Rural Business Enterprise Grants
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Very Flexible
Allocations to Area Offices
State Priorities
Not directly to businesses
Limited funds
Small and emerging private business enterprise =
business that will employ 50 or fewer employees &
has less than $1 million in projected gross income.
Jasper County RBEG, $121,000
Renovation of Farmers Market in Ridgeland
Uses of Grants
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Revolving loan fund
Infrastructure
Buildings & equipment
Technical assistance
Distant Learning networks
Current Revolving Loan Funds
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Town of Perry, SC
S.C. Office of Rural Health-Statewide
Native Island Business and Community Affairs-Hilton
Head Island
Allendale Enterprise Community
Williamsburg Enterprise Community
City of Sumter, SC
Charleston Citywide-Charleston, Berkley, &
Dorchester Counties
Telamon Corporation
Application & Terms
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Applicant applies to their local Rural
Development Area Office.
Reviewed annually for funding in June.
Typical grants $50,000-$150,000
Intermediary Relending Program
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Loans made to intermediaries (public body, nonprofit,
Indian group, or cooperative) to establish a revolving
fund to relend to ultimate recipients for business
facilities and community development in rural areas
Population cannot exceed 25,000
Initial loan $750,000 (FY 2007) or less
Applications
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Public body or non profit corporations contact
local Rural Development Area Office for
application.
Initial application can be for $750,000$1,000,000 per application.
Maximum $15,000,000 to one entity
Must have experienced loan personnel and
managers along with a loan policy and plan.
IRP Eligible Ultimate Recipients
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Ultimate recipients may be individuals,
public or private organizations, or other
legal entities, with authority to incur the debt
and carry out the purpose of the loan.
IRP Eligible Loan Purposes
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Business and industrial acquisitions, when loan will
keep business from closing, prevent the loss of
employment opportunities, or provide expanded job
opportunities.
Business construction, conversion, enlargement,
modernization, repair, or development.
Purchase and development of land, buildings,
easements, right-of-ways, facilities, leases, or materials.
Purchase of equipment, machinery, leasehold
improvements, or supplies
IRP Eligible Loan Purposes
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Pollution control and abatement.
Transportation services.
Start-up operating costs and working capital
Feasibility studies
Debt refinancing
Hotels, motels, tourist homes, convention
centers, bed & breakfast, convention centers.
Educational Institutions
Current IRP Lenders
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Business Carolina-Statewide
Catawba Regional Development Corp
Appalachian Regional Development Corp
Williamsburg Enterprise Community
Lake City Development Corp
Santee Lynches Development Corp
Lower Savannah Development Corp
S.C. Office of Rural Health
Community Development & Improvement Corp
Intermediary Relending Program
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If your community does not have access to a
revolving loan fund you are seriously
hindering your economic development.
Small businesses create over 80% of jobs in
America.
Rural Economic Development
Loans & Grants
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Can’t beat this one!!!!!
One of Top producer in 2007
Know your cooperative board
Gap financing
Enhance cash flow
Increase leverage
Santee Electric Cooperative/Palmetto Synthetic, LLC
REDLG, $740,000 0% for 10 years. Williamsburg County
For expansion creating 20 new jobs.
Application
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Electric or Telephone Cooperatives that have
had or currently have loans with Rural
Development and are current. (Most all
qualify in SC)
Cooperative applies to Rural Development’s
Area Office
Uses
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Business start-ups and expansions
Machinery & Equipment
Community Facilities
Infrastructure
Technical Assistance
Medical Facilities
Working Capital
Business incubator projects
Project feasibility studies
Advanced telecommunication & computer networks for medical,
educational, and job training services
Terms
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Loan: 0% Interest rate for 10 years to cooperative
passed through to business at 0% interest for 10
years.
Supplemental funds: Loan funds will not exceed
80% of total project cost. 20% must come from
applicant in the form of cash or a loan.
Grant: Creates a revolving loan fund that is loaned
out 1st time to non-profit or public body for
community/economic development activities at 0%
for 10 years then can be loaned out again when
repaid for non-restrict uses for economic
development purposes.
Current Users
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Broad River Electric Coop
Ridge Telephone Coop
Laurens Electric Coop
Blue Ridge Electric Coop
Aiken Electric Coop
Mid Carolina Electric Coop
Little River Electric Coop
Tri-County Electric Coop
Pee Dee Electric Coop
Farmers Telephone Coop
Santee Electric Coop
Renewable Energy & Energy
Efficiency Grants & Loans
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IT’S TIME!!!!!
Impact on Rural Communities can be great
Get started NOW!!!
Innovation Center
Help is available
Tony W. Johnson & Billy F. Johnson. Energy Efficiency Grant,
$8,750 & 13,980, Aiken County. For replacement of brooder
equipment & upgrading cooling pads for 4 poultry broilers each.
11/2006
Applications
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Must meet SBA guidelines for small business
Applications made through Rural
Development Area Offices to the state office
and then to National Renewable Energy Lab
(NREL) and our National Office for selection.
Must be an agricultural producer or rural
small business.
Application reviewed on competitive basis
Uses
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Construction and improvements
Upgrading of equipment
Energy audits
Fees
Business planning
Feasibility Studies
Types of Renewable Energy
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Bio-mass (ethanol & biodiesel) etc.
Anaerobic digester
Wind
Geothermal
Solar
Hydrogen
Energy Efficiency
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Improvements to buildings or facilities
Upgrading of equipment
Processes that reduce energy consumption
Calculated on a per square foot basis
Terms- Grants
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25%-75% matching funds of eligible project
cost
$500,000 for renewable energy
$250,000 for energy efficient
Energy audit/assessment may be required
Maximum grant to any one person $750,000
per year
Terms- Loan Guarantee
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50% matching funds of eligible project cost
$10,000,000 for renewable energy and energy
efficient loans
Energy assessment or audit may be required
May be done in conjunction with another B&I
guaranteed loan
85-70% guarantee
1-2% guarantee fee
Priority to loan/grant combinations
Contact Information
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Vernita Dore, Area Director
William Furman, Area Specialist
USDA Rural Development
532 Robertson Blvd.
Walterboro, SC 29488
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843-549-1822 office
[email protected] e-mail
[email protected] e-mail
www.rurdev.usda.gov/rbs website