USDA Rural Development Financing Programs for Business
The United States Department of Agriculture has many resources available
to promote growth and opportunities, not only in agriculture, but also
in many other aspects of rural America. Many of these projects are funded
through the Department of Rural Development. According to the USDA Rural
Development website www.rurdev.usda.gov/rd,
Rural Development is committed to helping improve the economy
and quality of life in all of rural America. Through our programs,
we touch rural America in many ways.
Our financial programs support such essential public facilities
and services as water and sewer systems, housing, health clinics,
emergency service facilities and electric and telephone service. We
promote economic development by supporting loans to businesses through
banks and community-managed lending pools. We offer technical assistance
and information to help agricultural and other cooperatives get started
and improve the effectiveness of their member services. And we provide
technical assistance to help communities undertake community empowerment
programs.
There are several specialized programs that are tailored to promote
business and economic growth. These include the:
- Intermediary Relending Program, which is a loan program for
non-profits and public bodies to loan to businesses for economic growth
or community development;
- Rural Business Enterprise Grants, which are used to make
grants to non-profits or public bodies to assist small emerging businesses
or incubators;
- Rural Business Opportunity Grants, which are also available
to non-profits or public bodies to assist in paying the costs of providing
economic planning, technical assistance and training for rural communities
or businesses;
- Rural Economic Development Loans and Grants, to provide grant
funds to electric or telephone utilities financed by the Rural Utilities
Service in order to provide a revolving loan fund which can be used
for community development projects, education, medical facilities
and in developing incubators; and
- Rural Cooperative Development Grants, which are made to non-profits
and institutions of higher learning to assist in the development of
new rural cooperatives and operational improvement of existing cooperatives.
Rural Development also has a new special initiative, Armament Retooling
and Manufacturing Support Program (ARMS), that offers commercial/industrial
businesses the opportunity to establish centers at eligible Army production
facilities.
However, the programs which are most utilized directly by businesses
are the Business and Industry Guaranteed Loans and the Business and
Industry Direct Loans. Through the guaranteed loan program, a lender
makes loans to the business much like the SBA loan programs. Many projects
in rural Missouri have been financed jointly by the SBA and Rural Development.
The upper limits of loans through the Small Business Administration
are $2.0 million. However, Rural Development can finance up to $10 million,
and for high-priority projects, the administrator in Washington may
grant an exception up to $25 million. Also eligible use of proceeds
and terms of the loan may vary between the two agencies. A major benefit
for the lender is that the guaranteed portion of the loan does not count
against the financial institution's lending limits.
The Business and Industry Direct Loans program is very similar
to the guaranteed loan program except that it is made directly to the
business. The upper limit is $10 million, and the proceeds can be used
for basically the same purposes. However, with this program, the applicant
must certify in writing that the applicant is unable to finance the
proposed project from its own resources or through commercial credit
at reasonable rates and terms. The loan guaranty program must be considered
prior to a direct loan being approved.
This is simply a very short synopsis of the many business resources
provided through USDA. However, if you have a community project or a
business opportunity, be sure to check the resources available through
Rural Development. Thirty-two local office sites administer Rural Development
programs in the State of Missouri. Local office contact information
is available on the website www.rurdev.usda.gov/mo/whoweare.htm,
or you may telephone the USDA state office in Columbia at 1-573-876-0976.
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Authored by: Willis Mushrush, Business and Industry
Specialist, University of Missouri Extension
Source: Creating Quality Newsletter, Volume
12, Number 2, February 2003
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