1. Creating New Opportunities
RURAL DEVELOPMENT
Creating New Opportunities
for Rural America
Visit us at
ONLINE

2. USDA RURAL DEVELOPMENT
RBS - Rural Business-Cooperative Service
RHS - Rural Housing Service
RUS - Rural Utilities Service
TO ORIENT YOU WITH USDA’S STRUCTURE
YOU CAN SEE BY THIS SLIDE THAT RURAL DEVLOPMENT
IS DEVIDED INTO THREE AREAS
RURAL BUSINESS SERVICES IS THE AREA WE WILL COVER TONOGHT
THE OTHER TWO HAVE MANY PROGRAMS BUTTHEY DO NOT
RELATE DIRECTLY TO ENTANOL PROJECTS

3. Business and Industry Guaranteed Loan Program
RBS
Business and Industry Guaranteed Loan Program
A Private-Public partnership
RURAL BUSINESS SERVICES IS A PARTNERSHIP
BETWEEN PRIVATE SECTOR AND THE PUBLIC SECTOR

4. Objective
Improve and develop Rural Businesses by financing business needs that result in greater employment
Improve economic and environmental climate in rural communities

5. Who are we?
Rural Development is a branch of the United States Department of Agriculture.

6. What do we do?
Guarantee loans by eligible local lenders to rural businesses

7. What we don’t do?
Inspect Meat
Commodity Payments
Farm Loans

8. Why do we do it ? To create and save jobs in rural America
Thus, improving the economy in rural America.

9. Why should a business want a Business and Industry (B&I) Guaranteed Loan?
1. Higher Loan Amounts

10. Why should a business want a B & I Guaranteed Loan?
2. Lower Interest Rates

11. Why should a business want a B & I Guaranteed Loan?
3. Longer repayment terms

12. Why should a business want a B & I Guaranteed Loan?
4. Assists in providing:
a. Stability
b. Growth
c. Expansion
d. Rural
Employment

13. Why would a lender want to do a Business and Industry Guaranteed Loan?
1. Provides another tool to expand their loan portfolio

14. Why would a lender want to do a B & I Guaranteed Loan?
2. Reduce the risk of loss on rural business loans

15. Why would a lender want to do a B & I Guaranteed Loan?
3. Improves the economy and quality of life in rural California , while satisfying CRA requirements

16. Why would a lender want to do a B & I Guaranteed Loan?
4. Reduces concerns about collateral /appraisal issues often found in rural California

17. Why would a lender want to do a B & I Guaranteed Loan?
5. Allows loans to be made above their legal lending limits

18. Why would a lender want to do a B & I Guaranteed Loan?
6. Increases their return when guarantee is sold in the active secondary market

19. Why would a lender want to do a B & I Guaranteed Loan?
7. Uses their forms, loan documents, and security instruments

20. What is a Rural area?
All areas except for cities of more than 50,000 people and their urbanized areas

21. Who can borrow? 1. Any legal entity: a. Individuals
b. Public organizations
c. Private organizations
d. Federally recognized tribal groups

22. Who can borrow? 2. Majority ownership by
US. citizens or permanent residents.
3. Less than 20% ownership by government or military employees

23. What businesses are excluded from the B & I Guaranteed Loan Program?
Owner-occupied and rental housing projects

24. What businesses are excluded from the B & I Guaranteed Loan Program?
Golf courses, racetracks, and gambling facilities

25. What businesses are excluded from the B & I Guaranteed Loan Program?
Lending, investments, insurance companies

26. What businesses are excluded from the B & I Guaranteed Loan Program?
Production agriculture

27. What can you do with the B& I loan funds?
Business and industrial acquisitions
Construction
Conversion
Expansion
Repair
Modernization
Reasonable Fees

28. Business Expansion

29. New Retail Center

30. New Theater

31. Purchase Manufacturing Building

32. What can you do with the loan funds?
Purchase of equipment, machinery, or supplies

33. What can you do with the loan funds?
Start-up costs and working capital

34. What can you do with the loan funds?
Processing and marketing facilities

35. What can you do with the loan funds?
Pollution control and abatement

36. What Can You Do With the Loan Funds?
Recreational type projects

37. What can you do with the loan funds?
Refinancing for viable projects, under certain conditions

38. What CAN’T you do with Loan Funds?
Lines of Credit

39. How much can be guaranteed?
Loan guarantees typically range from $750,000 to a maximum of $10 million. Exceptions to $25 million

40. What are Loan Guarantee Limits? (maximum % applies to the entire loan)
80% for $5 million or less
70% for over $5 million to $10 million
60% for over $10 million to $25 million

41. What are the Terms? Working Capital - 7 years maximum
Equipment - 15 years maximum
Real Estate - 30 year maximum
Blended Terms OK

42. What are the Equity Requirements?
New Business - 20% Tangible Equity
Existing Business - 10% Tangible Equity
Recreation and energy businesses may be higher
Book Value Basis with intangibles deducted.

43. FEASIBILITY STUDIES A feasibility study is generally required:
a new business (start-up) eg. Ethanol Plant
an existing Company lacking profitable history
significant expansion.
The feasibility study should be prepared by an independent consultant with expertise in that type of operation.

44. What type of collateral is required?
Collateral secures the entire loan. 100%
Personal and corporate guarantees are required.
A qualified appraisal report is required on property that will serve as collateral.

45. What is Adequate Collateral?
Sufficient Value, established by appraisal, to secure the loan. The values are discounted depending on the type of security offered.

46. B&I vs. SBA GUARANTEES
B&I can do Tenant Occupied Buildings (No 51% occupancy rule)
B&I can do Non-Profit Corporations
B&I Guarantee Fee at 2%
B&I limited to Rural Areas (<50,000 population)

47. How do I apply?
Lender contacts the local B&I Loan Officer - or Larry Strong / Davis
Contact Davis Office with any questions
(530)

48. Lender submits Preapplication
Loan Process
Lender submits Preapplication
Simple Format with basic information
Local B&I Loan Officer reviews it and schedules field visit

49. Lender submits Complete Application
Loan Process
Lender submits Complete Application
Form
Lender Credit Memo, Appraisals, Credit reports, etc.
ALL LENDER FORMS !

50. Rural Development Reviews Application
Loan Process
Rural Development Reviews Application
B&I Loan Officer processes the application and presents it to the State Loan Review Board.

51. Approval Loan Process SLRB Approves Guarantee
Request allocation NO fund
6 day wait minimum for funding
Local Office issues the Conditional Commitment to lender

52. Issuing the Guarantee Loan Process
Lender closes loan, provides documentation meeting conditions to Rural Development
Rural Development issues the Loan Note Guarantee

53. QUESTIONS? Thank You! John Jebian Area Director USDA Rural Development
(760) ext fax: (760)