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Guaranteed Lending |
USDA Business and Industry Loan Guarantee Program The Business and Industry (B&I) loan guarantee program is designed as a cooperative effort between the federal government and private banks to make available loans that might not otherwise be made available in a rural setting. The United States Department of Agriculture (USDA) defines a rural setting as a community with a population of 50,000 or less. In the B&I loan guarantee program, the USDA provides a guarantee to the lender against a loss resulting from borrower default ranges to a maximum of 80%. Some of the more common uses of B&I loans are:
Business Qualifications. As with all loans, the borrower must be credit-worthy and meet certain criteria to qualify for a USDA B&I loan. Some of the qualifications are:
USDA Community Facility Loan Guarantee Program Similar to the USDA Business and Industry loan guarantee program, the Community Facility (“CF”) loan guarantee program is designed as a cooperative effort between the federal government and private banks to make loans into rural communities for essential community facilities. The USDA defines a rural setting for a CF loan guarantee as a community with a population of 20,000 or less. In the CF guaranteed loan program, the USDA guarantees losses from the default of the borrower up to 90%. The CF loan guarantee program provides longer repayment terms—up to 40 years—for the development, construction, enlargement, improvement and operation of essential community facilities for public use in rural areas. Direct and guaranteed loans are available to public entities such as municipalities, counties, special-purpose districts, Indian tribes and nonprofit corporations Proceeds from CF loans may be used to construct, enlarge or improve community facilities, including health care, public safety and public services, community buildings, child care centers, courthouses, public maintenance buildings, libraries, schools, industrial parks, roads, bridges, airports, fairgrounds, utilities and other improvements. It can also be used to acquire interest in land, leases and right of ways necessary to develop the facilities. In addition, loan funds may also be used for the operation of these facilities. Funds may also be used for multi-service centers and to pay necessary costs connected with these facilities. The project must be based on taxes, assessments, revenues, fees or other satisfactory sources of money sufficient for operation, maintenance and reserve, as well as retire the debt. The project also must be consistent with available comprehensive and other development plans for the community, and comply with federal, state and local laws. Community Qualifications. To be an eligible loan or grant purpose under the Community Facilities Program, an essential community facility should meet all of the following criteria:
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