Presentation on theme: "USDA / Rural Development’s Business & Cooperative Programs Vernita Dore Area Director William Furman Area Specialist."— Presentation transcript:
USDA / Rural Development’s Business & Cooperative Programs Vernita Dore Area Director William Furman Area Specialist
Rural Development 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 Grants Direct Loans Guaranteed Loans
Business & Cooperative Programs 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 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 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 Private sector financing Guarantee marketable Improved terms (7/15/30) Bank loan forms our application Bank serviced and over site 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. Community Reinvestment Act (CRA) credit Does not count against lending limits to borrower
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 Eligible credit worthy borrowers Apply through lender and Rural Development Area Office
Uses of Loan Funds 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 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 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 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 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 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 Revolving loan fund Infrastructure Buildings & equipment Technical assistance Distant Learning networks.
Current Revolving Loan Funds 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 Applicant applies to their local Rural Development Area Office. Reviewed annually for funding in June. Typical grants $50,000-$150,000
Intermediary Relending Program 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 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 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. 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 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 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 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 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 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 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 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 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 1 st 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 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 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 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 Construction and improvements Upgrading of equipment Energy audits Fees Business planning Feasibility Studies
Types of Renewable Energy Bio-mass (ethanol & biodiesel) etc. Anaerobic digester Wind Geothermal Solar Hydrogen
Energy Efficiency Improvements to buildings or facilities Upgrading of equipment Processes that reduce energy consumption Calculated on a per square foot basis
Terms- Grants 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 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 Vernita Dore, Area Director William Furman, Area Specialist USDA Rural Development 532 Robertson Blvd. Walterboro, SC 29488 – 843-549-1822office – firstname.lastname@example.org e-mail email@example.com – firstname.lastname@example.org e-mail – www.rurdev.usda.gov/rbswebsite www.rurdev.usda.gov/rbs