rurdevda/ga/rbs.htm

www.rurdev.usda.gov/ga/rbs.htm

USDA - RURAL DEVELOPMENT FY 2005 LOAN AND GRANT

PROGRAMS INVESTED OVER

$168 MILLION IN GEORGIA

FY 2005 ACCOMPLISHMENTS

THROUGH OUR PROGRAMS

• SINGLE FAMILY HOUSING PROGRAMS- Assisted 727 people in buying their own homes and provided funds to repair 410 homes

• COMMUNITY PROGRAMS - Water or waste funds for five communities serving 2,881 people

• BUSINESS PROGRAMS - Created and saved 1,629 jobs

• MULTI-FAMILY HOUSING PROGRAMS – 8,315 families received rental assistance

MA 119

ME294

RI 32CT

MD

VT

NH 73

PR 103HI 117

NC 470

SC 210TN 351

KY 228

OH 271 IN

172

MI 260

NY248

PA 287

AL179MS

184

FL 167

LA 212

IL 309

MO 327

IA 317

WI 346

MN 381

AR 128

MT 197 ND 166

SD 202

NE 260

KS 196

OK 242

TX 203

WY 126

CO 274

NM 120

ID 189OR 153

CA CA 545

NV 45UT 86

AZ 96

WA 170

DE 42NJ 68

VI 22

Rural Business-Cooperative Service CaseloadAll Programs As of September 30, 2005

WP 32

$8M - $50M >$50M - $100M >$100M - $150M >$150M - $200M>$200M - $250M >$250M - $600M

110

124

97

Total Cases: 10,324 Total Funds: $ 6, 962,350,453

AK 105

GA 329

MT 226

VA 116

WV 195

BUSINESS & INDUSTRY (B&I) GUARANTEED LOAN PROGRAM

(RD INSTRUCTION 4279-A, B and 4287-B)

PURPOSE:

• To improve, develop, or finance business, industry, and employment and improve the economic and environmental climate in rural communities.

• This purpose is achieved by bolstering the existing private credit structure through the guarantee of quality loans made by lenders to provide lasting community benefits.

THE PROCESS

• The B&I program is a lender-driven process.

• A potential borrower should seek out a supportive lender. The Agency cannot consider a B&I proposal in detail until a lender expresses serious interest in the project.

• The lender coordinates the application process on behalf of the potential borrower.

• The first step is to submit a pre-application and set up a processing conference.

GUARANTEE LIMITS

• Maximum of 80% of loans up to $5,000,000

• Maximum of 70% of loans over $5 - $10 Million

• Maximum of 60% above $10,000,000.

• The guarantee applies to principal, accrued interest and approved protective advances.

• The guarantee does not cover interest on interest, late fees or default rates of interest that exceed the note rate.

RURAL BUSINESS ENTERPRISE GRANT (RBEG)

RD Instruction 1942-G

PURPOSE:

To support the development of small and emerging businesses: A start-up or expansion of a business with 50 or fewer new employees

and less than $1 million in projected gross revenue (clarified in AN 3955).

ELIGIBLE APPLICANTS

• Public entities (towns, communities,

State agencies, authorities, Indian tribes);

• Private nonprofit corporations;

• NOT cooperatives unless organized as a private

nonprofit corporation.

RBEG PROJECT PURPOSES

•Infrastructure Structure Improvements

(Water and Sewer Improvements; Enhancing Downtown Parking to Increase Easy Access to Businesses, etc.)

•Training Enhancements (example: Truck Driving Simulator)

SELECTION FACTORS• Population• Economic Conditions – unemployment and median household income• Applicant experience• Evidence of small business development• Commitment of nonfederal funding sources• Evidence of need for a revolving loan fund• Evidence of jobs to be created/saved• Project is part of a community or economic development plan

covering the project area• Grant size• State Director discretionary points

ELIGIBLE PURPOSES (RBEG)

• Revolving loan fund• Technical assistance (problem solving

activity performed for the benefit of the small business)

• Construction, acquisition, expansion of buildings, machinery, equipment, utilities (must be owned by the grantee not the benefiting business)

• Training in connection with technical assistance

INELIGIBLE PURPOSES (RBEG)

• Agricultural production• Comprehensive area-wide planning• Loans when the rates, terms and charges are not reasonable• To fund a project that is dependent on other funds that are

not committed• Any project that does not have a reasonable prospect for

the development of eligible business or businesses• No pass-through grants to Ultimate Recipient

APPLICATION PROCESS

• Application are submitted to Rural Development Area Office

• Applications are selected on a statewide competitive basis• Applications not selected in the statewide competition may

compete for reserve funds at the National level.

FUNDS AVAILABILITY

• National allocation typically $40 million.• Several earmarks for special initiatives (EZ/EC)• Each State receives an allocation.• Very popular and competitive program.• Suggest review program priorities (scoring) outlined in

1942-G before spending time on application.• Discuss the project with RD Area Office in the

planning stage

RURAL ECONOMIC DEVELOPMENT LOAN AND GRANT

PROGRAM (REDLG)Instruction 1703-B

PURPOSE:

•Promote rural economic development and job creation projects.

•Direct funds to those areas experiencing the greatest economic hardship.

• Active Rural Utilities Service electric or telecommunications borrowers • (list located at www.usda.gov/rus/electric/borrowers)

• or one who has prepaid a RUS loan • In Georgia

• Troup Electric Membership Corp, LaGrange• Walton Electric Membership Corp, Monroe• Snapping Shoals Electric Membership Corp, Covington• Flint Electric Membership Corp, Reynolds• Mitchell Electric Membership Corp., Camilla• Cobb Electric Membership Corp., Marietta• Oconee Electric Membership Corporation, Dudley

REDLG – ELIGIBLE APPLICANTS

RED LOANS

• Zero interest loans are made to RUS borrowers who relend the money at zero interest for up to 10 years to ultimate recipients.

• The maximum loan is $740,000 for FY 2005.

• FY 2005 Funding Available Nationwide: $24,802,639

RED LOANS

• RUS borrower must provide a 20% match.

• RUS borrower is responsible for loan payments if the ultimate recipient defaults.

• Funds can be used for any business start-up or expansion project including feasibility studies and related project costs.

RED GRANTS

• Grants not to exceed $300,000 (FY2005) to eligible RUS borrowers.

• RUS borrower must provide 20% match.

• FY2005 Funds Available Nationwide: $10 MILLION

RED GRANTS

• Grant and match loaned to a non-profit entity or public body for a needed community facility or service or for profit entity engaged in education for health care.

• Loans are at 0% interest for up to 10 years.

• Loan repayments capitalize a low-interest revolving loan fund administered by the RUS borrower in accordance with a work plan.

RURAL BUSINESS OPPORTUNITY GRANT (RBOG)

RD Instruction 4284-G

PURPOSE:

Promote sustainable economic development in rural communities with exceptional needs through:

•Providing technical assistance for business development

•Economic development planning

ELIGIBLE APPLICANTS

• Public bodies• Nonprofit corporations• Indian tribes• Cooperatives with members who are primarily

rural residents and conduct activities for the mutual benefit of the members

ELIGIBLE APPLICANTS

• Must show sufficient financial strength (positive tangible net worth)

• Must show expertise in the activity proposed in the application or in choosing and supervising consultants if that is how work will be accomplished

• Identify, train and provide technical assistance to existing or prospective rural businesses

• Establish business support centers

• Conduct local or multi-community economic development planning

• Establish centers for training, technology and trade

• Conduct leadership development training

• Reasonable professional fees and charges associated with the above uses

ELIGIBLE PURPOSES (RBOG)

FUNDS AVAILABILITY

• VERY LIMITED

• No state allocations

• National appropriation ($3-5 million)

• Earmarks for EZ/EC/REAP and Native American

• 1940-L sets annual limits- $50,000 maximum project or $150,000 multi- state- two submissions to NO per State- above does not apply to earmarks

*Know the scoring process*

USDA Funding Assistance for Rural Renewable Energy (RE) and

Energy Efficiency (EE):Section 9006

PURPOSE:

To help agricultural producers and small businesses reduce energy costs and consumption through the purchase of RE systems or

installation of EE improvements

THE 9006 PROGRAM

• Created as a U.S. Department of Agriculture program• Program designed to assist farmers, ranchers and rural

small businesses with energy projects• In 2005, this program provides grants for renewable

energy and energy efficiency projects and may provide loan guarantees

• Created as a 5 year program. Congress has funded the program at $22.8 million per year for the first three years.

• In 2003 and 2004, a total of $44 million in grants were awarded to 281 projects in 33 states.

ELIGIBLE PROJECTS• Any renewable energy and energy efficiency project as defined in the law. • Requirements for eligible projects:

– Must be located in a rural area.– Must be for a pre-commercial or commercially available and replicable technology.– Must be technically feasible.– Must have sufficiency revenues to provide for operation and maintenance

• Grants request must not exceed 25% of project costs– Minimum grant request: $2,500– Renewable Energy:

• Maximum grant request: $500,000 • If request is over $50,000, NOFA requires a project-specific feasibility study prepared by

a qualifies independent consultant– Energy Efficiency

• Maximum grant request: $250,000• If total project costs are over $50,000, NOFA requires an energy audit

• The applicant must be the owner of the project and control the operation and maintenance of the proposed project.

FARM BILL DEFINITIONS

• Renewable Energy – energy derived from:– wind, solar, biomass, or geothermal source, or – hydrogen derived from biomass or water using one of the above energy sources

• Biomass – any organic material that is available on a renewable or recurring basis. Includes:

– agricultural crops– trees grown for energy production– wood waste and wood residues– plants (including aquatic plants and grasses)– residues– fibers– animal wastes, and – fats, oils and greases (including those that are recycled).

• The term “biomass” does not include paper that is commonly recycled or unsegregated solid waste.

TECHNICAL REQUIREMENTS

• Different Technology Requirements for:– Biomass, Bioenergy – Anaerobic Digester– Geothermal, electric generation– Geothermal, direct use– Hydrogen– Solar, small (10 kW or smaller)– Solar, large (larger than 10 kW)– Wind, small (100 kW or smaller)– Wind, large (larger than 100 kW)– Energy Efficiency

• USDA has worked with technology experts to develop Guidance on the Technical Requirements for each technology.

– Designed to help applicants better understand how to respond to the technical requirements of the 2005 NOFA.

– Available at www.rurdev.usda.gov/rbs/farmbill/ under “Tools and Resources”

RURAL COOPERATIVE DEVELOPMENT GRANTS (RCDG)

RD INSTRUCTION 4284-F

PURPOSE: • Establishing and operating centers for cooperative development for the

primary purpose of improving the economic condition of rural areas through the development of new cooperatives and improving operations of existing cooperatives.

• To encourage and stimulate the development of effective cooperative organizations in rural America as a part of its total package of rural development efforts.

ELIGIBLE APPLICANTS

• Nonprofit corporations

including institutions of higher education

ELIGIBLE ACTIVITIES

• Examples of eligible activities include providing board of director training, conducting feasibility studies, and developing business plans.

• Centers should focus on cooperative development, but may also assist other types of rural businesses.

ELIGIBLE AREA

All projects completed with grant and/or matching funds must occur in rural areas.

VALUE-ADDED PRODUCER GRANTS (VAPG)

RD INSTRUCTION 4284-J

PURPOSE:

To Help Eligible Applicants to Create Marketing Opportunities and to Help Develop Business Plans for

Viable Marketing Opportunities

ELIGIBLE GRANT PURPOSES

For planning activities and working capital for marketing value-added agricultural products and for

farm-based renewable energy.

ELIGIBLE APPLICANTS

• independent producers

• farmer and rancher cooperatives

• agricultural producer groups

• and majority-controlled producer-based business ventures

MATCHING FUND REQUIREMENT

• Cash or confirmed funding commitments from non-federal sources

• Must be at least equal to the grant amount

COOPERATIVE DEVELOPMENT

PURPOSE:

To help residents form new cooperative businesses and improve the operations of

existing cooperatives.

COOPERATIVE BUSINESS STRUCTURE

Meeting Member Needs

• Improve bargaining power when dealing with other businesses

• Reduce costs

• Obtain products or service otherwise unavailable

• Obtain market access or broaden market opportunities

• Improve product or service quality

• Increase income

INTERMEDIARY RELENDING PROGRAM

(RD INSTRUCTION 4274-D)

PURPOSE:

Alleviate poverty and increase economic activity through low-interest loans to small businesses and community development projects in a rural area.

ELIGIBLITY REQUIREMENTS - INTERMEDIARY -

(RD INSTRUCTION 4274-D, SECTION 4279.307)

• Private non-profit corporations

• Public agencies

• Indian groups

• Cooperatives

ELIGIBLITY REQUIREMENTS - INTERMEDIARY-

(RD INSTRUCTION 4274-D, SECTION 4279.307)

• Have legal authority, ability to provide security and loan repayment ability.

• Have loan making and servicing experience.

• Have acceptable capitalization.

• Document that conventional credit is not available at affordable rates and terms.

ELIGIBILITY REQUIREMENTS - ULTIMATE RECIPIENTS -

(RD INSTRUCTION 4274-D, SECTION 4279.308)

• Be citizens or legally admitted to the U.S.

• Be located in a rural area - not within the outer boundary of a city with a population of 25,000 or more.

• Be individuals, public or private organizations with authority to incur debt, give security and repay the loan.

(Corporation, partnership, LLC, individual, non- profit corporation, public body, other).

AGENCY’S PARTICIPATION

Until all IRP loan funds are advanced, the Agency reviews:

• the intermediary’s analysis and certifications on each ultimate recipient’s application, and,

• completes an environmental assessment.

Revolved funds must still be used for eligible purposes in accordance with the Intermediary’s scope of work.

LOAN PURPOSES(RD INSTRUCTION 4274-D, SECTION 4274.314 )

ELIGIBLE:

• Establish or expand businesses (similar to B&I loan purposes) or community development projects (similar to Community Facility or Water/Waste projects).

• Land, equipment, working capital, and fees.

INELIGIBLE:

• See RD Instruction 4274-D, Section 4274.319

(examples: agriculture production and golf courses)

LOAN TERMS AND AMOUNTS (RD INSTRUCTION 4274-D, SECTIONS 4274.320, 4274.325, AND 4274.331 )

INTERMEDIARIES:

• 1% Interest for a term of up to 30 years.

• Defer principal for 3 years.

• Guidelines for FY2005 Initial loan limited to $750,000 – $1 Million,

Subsequent loan limited to $750,000 Total debt limited to $15 Million

LOAN TERMS AND AMOUNTS (RD INSTRUCTION 4274-D, SECTIONS 4274.320, 4274.325, AND 4274.331 )

ULTIMATE RECIPIENTS:

• Interest rate and term established by Intermediary in work plan (Usually 4 - 6% interest with terms of 3 to 10 years depending on loan purpose).

• Maximum loan of $250,000 or 75% of the project cost whichever is less.

LOAN SECURITY (RD INSTRUCTION 4274-D, SECTION 4274.314 )

INTERMEDIARIES:• Pledge of IRP revolving funds and loans, assets of the

borrower, other rights and interests.

ULTIMATE RECIPIENTS:• Normally the same as any other business loan. • Depends on the use of loan funds. • Often will include lien on real estate and equipment • Personal guarantee of owners, life insurance on owners, etc.

APPLICATION PROCEDURES (RD INSTRUCTION 4274-D, SECTION 4274.343 )

FORM RD 4274-1 WORK PLAN

• Ability and experience to administer a revolving loan program.

• Need for loan funds.• Rates and terms of loans.• Proposed fees.• Sources of other funds.• Pro forma financials.• Proposed application form for ultimate recipients.

AGENCY PROCESSIF APPROVED:

Issue Letter of Conditions

Request OGC Closing Instructions

Note: FY 2005 funds available nationwide: $33,939,318

If Ultimate Recipients Fail to Repay Loans from the Intermediary, what happens to the

Intermediary's Loan from RBS?

When the intermediary accepts the IRP loan, it is incurring a debt.

Collections from loans to ultimate recipients should be sufficient to repay the RBS loan on schedule.

However, even if collections from ultimate recipients are not sufficient, the intermediary is fully responsible for repaying RBS.

Total Loans: 57Total Funds: $33,939,314

$150 - $300

>$300 - $600

>$600 - $1M

MA

ME 2

RI CT

MD

VT 1

NH 5

PR

HI 1

AK 1

VA 1

NC 6

SC 2 TN 1

KY 2

OH IN

MI

NY

PA 1

GA 1

AL MS

FL 1

LA

IL 1

MO 1

IA 5

WI 1

MN

AR 1

MT 1 ND 1

SD 2

NE 1

KS

OK 2

TX 5

WY

CO

NM 1

ID 1OR 1

CA 4

NV 1

UT 1

AZ 1

WA

DE NJ

VI

Intermediary Relending Loan ProgramFY 2005

WP

>$1M - $1.5M

>$1.5M

$0

WV 1

As of September 30, 2005

In Thousands

MA

2

ME 12

RICT

MD 10

VT 8

NH 6

PR 3 HI 1

VA 3

WV 9

NC 16

SC 8 TN 14

KY 17

OH 8IN

MI 9

NY 11

PA 17

GA 9AL 7 MS 8

FL 3

LA 11

IL 7

MO 6

IA 21

WI 7

MN 28

AR 9

MT 13 ND 6

SD 16

NE 6

KS 4

OK 13

TX 3

WY 2

CO 3

NM 1

ID 6OR 14

CA 19

NV 1

UT 5

AZ 4

WA 7

DE 1NJ 2

VI 3

Intermediary Relending Program CaseloadAs of September 30, 2005

WP 1

$0 >$100,000 - $3M >$3M - $6M >$6M - $9M >$9M-$12M

>$12M - $20M

Total Borrowers: 404 Total Loans Closed: $529,246,826

AK 2

>$20M

IL 9

1890 LAND GRANT INSTITUTIONS

RURAL ENTREPRENEURIAL PROGRAM OUTREACH

INITIATIVE

PROGRAM HISTORY

• The 1890 Institutions have some of the best agricultural science and business education programs in the nation.

• Therefore, USDA, Rural Development, and the 1890 Land-Grant Universities are working together on a new approach to support the development of businesses that create quality jobs.

Program Goals

• Develop income-producing projects for under-developed rural communities;

• Create self-sustaining, long-term economic development in targeted areas of high unemployment

• Assist and guide these communities in becoming self-sustainable.

Partnership

• 1890 Institutions provide businesses with the assistance needed to organize and operate efficiently and profitably.

• To ensure quality education related to small business development is available in these communities.

Purpose of the Program

• To support Rural Development’s goals and objectives of providing technical assistance for business creation in economically challenged rural communities.

• To support educational programs to develop and improve upon the professional skills of rural entrepreneurs.

Purpose of the Program (Cont.)

• To support outreach and promotion of USDA, Rural Development, programs of assistance in small rural communities with the greatest economic need.

Program Objectives

The main objective of this program with the1890 Land Grant Institutions:

Is to strengthen the capacity of these communities to undertake innovative, comprehensive, citizen-led, long-

term strategies for community and economic development, including entrepreneurship and job creation.

How Does the Initiative Work?

• Through cooperative agreements, 1890 institutions are able to receive USDA Rural Development funding to establish economic development programs for their neighboring communities.

Program Objectives• Promote Rural Development programs in the targeted

underserved areas (Contact RD State Office for list of underserved areas)

• Build capacity in those targeted underserved rural communities

• Encourage and assist the community leaders and residents to participate in the programs Rural Development has to offer

• Increase interst of underserved rural residents seeking programs at the Rural Development State Offices

Types of Assistance

• Sponsor business conferences and workshops; • Finance rural businesses; • Provide technical assistance to new and existing businesses,

including cooperatives; • Assist communities in leveraging other resources via state, local,

private, and/or public funding; • Assist businesses through the application process; • Offer educational courses in business development; • Provide computer labs where community members can have access

to other rural economic development sources on the Internet; • Establish business incubator services.

How are the 1890 Institutions Outreaching USDA Rural Development Programs in

Rural Communities?

The 1890 Land Grant Institutions, with assistance from Rural Development National and State offices are working with these targeted rural communities to strengthen their capacity for economic and community development.

Method Used

• Assist in developing of business plans, loan packages, marketing strategies and accounting

• Assess and conduct feasibility studies of local community

• Recommend and advise community leaders regarding economic and community development

• Conduct seminars workshops and conferences to disseminate information to stimulate business and economic development

• Develop information technology outreach training for rural communities

Method Used (cont.)

• Conduct outreach through the use of computer technology and maintaining an internet web presence which links community leaders and residents to available economic development information.

• Provide one-on-one technical assistance to entrepreneurs and community leaders

• Conduct classes in new venture planning

• Assist clients with existing Rural Development loans and grants

Program Impact/Outcome

• Created new jobs

• Saved businesses

• Saved jobs

• Developed business incubators

• Assisted clients in securing business loans

• Assisted community leaders in preparing applications for Rural Development loan and grant programs

Program Impact/Outcome (Cont.)

• Assisted community leaders in preparing applications for Rural Development loan and grant programs

• Assisted community leaders with writing proposals for Rural Development grant programs

• Provided computers to underserved rural communities

• Developed a better working relationship between 1890 institutions, Rural Development National and State Offices, and the underserved rural communities

Program Success Stories

University of Arkansas-Pine-Bluff, AR

• Assisted Ms. Angela Williams, a local business woman to develop a marketing plan for her Computer Tots training business. The marketing plan was designed to create a regional/and or Statewide program. Since developing the marketing plan, the business has obtained two local contracts and was highlighted in the local newspaper.

• Assisting a minority farmer in developing an operations business plan for his vegetable processing plant located in Mariana, Arkansas. Once the facility is in full operation, it will supply the Marriott and Kroger’s stores with greens, beans and other fresh produce. Several other farmers have been identified to supply produce to the processing facility.

Program Success StoriesFort Valley State University, GA

• RBOI provided technical assistance and an IRP loan of $18,375 to an entrepreneur to expand her flower and gift business facilities.

• RBOI and University of Georgia Small Business Development Center (SBDC) partnered to present the “Minority Business Conference” held at Fort Valley State University, May 19, 2005. Approximately 40

participants attended the conference.

Program Success Stories

Langston University, OK

• Assisted rural communities to set up a conference on “Faith Based Opportunities” for religious organizations in Oklahoma.

• Organized and facilitated a community planning meeting for community leaders to discuss the possibilities of installing a water/sewer system in a local town.

Program Success Stories

South Carolina State University, SC

• Assisted an entrepreneur to develop a feasibility and business plan for a proposed hotel project.

Program Success Stories

Tuskegee University

• Worked with the local community to secure a $500,000 grant for the purpose of forming a CDC that would focus on University-community partnerships and revitalization of the campus neighborhoods.

• Space provided by the county has been renovated and is serving as a small business incubator. Four of the nine available spaces have been rented.

• Ten business plans have been finalized for start-up entrepreneurs; seven have applied for SBA community express loans, and is expected to close on at least four with a micro-loan ranging between $15,000 and $50,000.

Program Success Stories

Southern University and A&M College, LA

• This project provides access to the internet for small rural communities through a tool called “Business Information System Network (BISNet).

• The project is a resource tool whose main purpose is help rural communities get connected on the Internet’s world wide web.

Program Funded Level and Number of Institutions

YEAR FUNDED LEVEL # OF INSTITUTIONS AWARDED

Dollars Number

1997 2,070,000 18 1998 2,151,498 14 1999 2,000,000 9 2000 2,000,000 10 2001 1,600,000 11 2002 1,499,961 11 2003 1,800,000 14 2004 1,800,000 15 2005 1/ 1,200,000 12

1/ Proposed for FY 05. Maximum award per institution per year , FY 02-Fy 04 was $150,000. Maximum award per institution proposed for FY 05 is $100,000.

1890 Land Grant Institutions

NAME STATE

1. Alabama A&M University AL2. Tuskegee University AL3. University of Arkansas-Pine Bluff AR4. Delaware State University DE5. Florida A&M University FL6. Fort Valley State University GA7. Kentucky State University KY8. Southern University & A& M University LA9. University of Maryland-Eastern Shore MD

1890 Land Grant Institutions Cont.

NAME STATE

10. Alcorn State University MS 11. Lincoln University MO12. North Carolina A&T State University NC 13. Langston University OK 14. South Carolina State University SC

15. Tennessee State University TN

16. Prairie View A&M University TX 17. Virginia State University VA

18. West Virginia State College WV

For Georgia

GEORGIA RD STATE OFFICE:

(706)546-2154

www.rurdev.usda.gov/rbs

See Handout For RD State Office See Handout For RD State Office

Contact InformationContact Information

Contact Information: