Rural Development, US Department of Agriculture
Business & Industry (B&I) Guaranteed Loan Program – USDA Rural Development (RD) provides loans to businesses with the B&I Program.
These loans are for business and industrial development. RD assistance is provided in the form of a loan guarantee of up to 80 percent for loans of $5 million or less and up to a 70 percent for loans from $5-10 million. Applicants apply for loans through private lenders.
Funds from the B&I program may be used to finance business construction, business acquisitions, expansions, machinery and equipment purchases and working capital. A company is required to provide sufficient cash or other assets as an assurance of its commitment to the project’s success and to meet minimum loan requirements.
B&I loans may be made in areas outside the boundary of cities with a population of 50,000 or more.
Rural Economic Development Loans and Grants Program (REDLG)
This program finances economic development and job creation projects in rural areas based on sound economic plans. Rural Economic Development Loans and Grants are available to any Rural Utilities Service (RUS) electric or telecommunications borrower to assist in developing rural areas from an economic standpoint, to create new job opportunities and to help retain existing employment.
Loans, at zero percent interest, are made primarily to finance business start-up ventures and business expansion projects. Projects should primarily create jobs for rural residents or residents of cities having a population of 50,000 or less. The loan limit to a borrower is $2 million for loan. The loan program can be combined with the grant program if the ultimate recipient meets the eligibility criteria for both the loan and grant funds.
Grants of up to $300,000 are made to these electric and telephone utilities to establish a revolving loan that is operated at the local level by the utility. The revolving loan fund provides zero percent interest loans to nonprofit entities and municipal organizations to: finance community facilities that promote job creation in rural areas, create facilities that extend or improve medical care to rural residents, or develop facilities that promote education and training to enhance marketable job skills for rural residents. Revolving loan funds ultimately provide loans to private for-profit and not for profit entities.
Rural Business Enterprise Grants (RBEG)
Rural Business Enterprise Grants help eligible entities (public bodies, nonprofit corporations and federally-recognized Indian tribal groups) finance and facilitate development of small and emerging private business enterprises located in rural areas.
This includes all areas other than cities of more than 50,000 people and the urbanized area contiguous and adjacent to such a city. Grant funds, which go to an eligible entity as noted above, help provide assistance to small and emerging private business.
Projects that are regional in nature, collaborate with local and state resources and display a plan for sustainability are given the highest priority.
RBEG funds may be used for the following activities:
- Acquisition and development of land and the construction of buildings, plants, equipment, access streets and roads, parking areas, utility and service extensions and fees for professional services.
- Technical assistance and related training.
- Start-up costs and working capital and financial assistance to a third party through the establishment of a revolving loan fund by the eligible entity.