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New Campaign Aims to Help Rural Communities
March 12, 2008 - In a campaign called Equity Partnerships Across America, state and regional lending specialists from USDA Rural Development are meeting with lenders in communities throughout the country to discuss the benefits its guaranteed loans can bring to lenders, local businesses and rural communities.
USDA Rural Development is re-tooling and re-investing in its guaranteed loan programs, according to Ben Anderson, Administrator, Rural Business-Cooperative Programs, USDA Rural Development.
“Increased loan funds, along with streamlined processes and a can-do attitude in Rural Development are stimulating stepped-up investment in rural communities,” Anderson says. “With help from our portfolio of loan guarantees, lenders, businesses, nonprofits and state and local governments are financing a rural renaissance all across America. Our people are working diligently to build relationships with more lenders in order to increase economic opportunity, create and save jobs and enhance the quality of life in our rural communities.”
USDA Rural Development offers four loan guarantees.
1. Business & Industry (B&I) Guaranteed Loans, depending on the amount of the guaranteed loan, can provide up to a 90 percent guarantee for loans to new or existing businesses located in any area other than cities and towns with greater than 50,000 population and their contiguous and adjacent urbanized areas. These loans can finance new construction, equipment, expansion, working capital and debt restructuring. Borrowers can be manufacturers, retailers, agribusinesses, healthcare providers, residential developers, hotel and motel owners and many other categories of businesses that stimulate jobs, community growth and quality of life.
2. Community Facilities (CF) can guarantee up to 90 percent of loans for public facilities in communities of up to 20,000 people. The guarantees help public bodies, nonprofit organizations and tribal governments secure financing for land acquisition, construction, expansion, legal and other professional fees, equipment and fixtures. The loan guarantees help lenders finance construction; enlarge or improve facilities such as schools, community colleges and vocational schools, libraries, hospitals, medical clinics, assisted living facilities, fire and rescue stations, police stations, community centers, homeless shelters, public buildings, detention facilities and help finance transportation-related improvements.
3. Water and Environmental Programs (WEP) Guaranteed Loans can provide up to 90 percent on loans to build or improve basic public water utilities, such as water and sewer systems, storm sewers and solid waste facilities in communities of up to 10,000 people. USDA partners with lenders who finance both construction and non-construction costs, including land, equipment, engineering services, legal services, capitalized interest and initial operating funds. Users of these guaranteed loans are nonprofit corporations and public bodies, including municipalities, counties, special-purpose districts and tribal governments.
4. Loan guarantees for Renewable Energy Systems and Energy-Efficiency Improvements help farmers, ranchers, and rural small businesses purchase and install renewable energy systems or make energy-efficiency improvements. The guaranteed loan can cover up to 50 percent of eligible project costs and up to 85 percent loan guarantee, depending on the amount of loan. Renewable energy systems can include wind turbines, solar energy systems, geothermal heating and cooling, anaerobic digesters using food or livestock waste, systems using biomass fuels and ethanol or biodiesel plants.
USDA Rural Development personnel are reminding lenders that guaranteed loans offer a wide range of benefits, including reduction of risk, which may enable lenders to offer more competitive pricing and loan structuring for local business and industry.
Another benefit is that the guaranteed portion of the loan is equivalent to a federally backed security that the lender can choose to sell on the secondary market. Guaranteed loans also help lenders meet Community Reinvestment Act requirements. Using loan guarantees to help finance community facilities can mean good community relations for lenders.
USDA Rural Development Guaranteed Loans are available to Federal or State-charted banks, Farm Credit System entities, the National Rural Utilities Cooperative Finance Corporation, savings and loan associations, building and loan associations, State bond banks, State bond pools, mortgage companies, credit unions and insurance companies regulated by the National Association of Insurance Commissioners.
Lenders interested in meeting with local USDA Rural Development personnel to learn more about guaranteed loans should call 1-800-670-6553l to be connected to your USDA Rural Development state office. More information about guaranteed loans is available at: www.rurdev.usda.gov.
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