Rural Business Financing Through the USDA

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 Web site www.rurdev.usda.gov/rd,

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 at www.rurdev.usda.gov/mo/whoweare.htm, or you may telephone the USDA state office in Columbia at (573) 876-0976.