USDA Loan PRograms for business

For any project to be eligible for USDA loans it must be classified as rural.

Rural areas are any areas other than:
(1) A city or town that has a population of greater than 50,000 inhabitants; and 
(2) The urbanized area contiguous and adjacent to such a city or town, as defined by the U.S. Bureau of the Census using the latest decennial census of the United States.

In general, it is a loan guarantee program, with incentives for both the borrower and the bank to participate:

• A loan Guarantee Program -between 60-80% of loan
• You need to find a partner Bank
• The loans must be fully amortized, without calls or balloon repayment structures. Longer terms can reduce additional loan fees that may be incurred in the future on shorter term loans or balloon loans. The interest rates for the loans are negotiated between the lender and the applicant and may be either fixed or variable (or a combination of fixed and variable). 
• Must create jobs
• Must be USDA Eligible
• There is a one-time guarantee fee currently set at three (3) percent of the guaranteed principal amount due when the guarantee is issued.  

Heres more

USDA Grants are generally given to rural cities, groups non-profits in rural areas aimed at providing incentives for growth of business/farms/business incubators/non profits.

Rural Business Enterprise Grants (RBEG)-more

     Projects funded under the RBEG program benefit small and emerging private businesses in rural areas. Small and emerging private businesses are those that will employ 50 or fewer new employees and have less than $1 million in projected gross revenues. There is no required maximum level of grant funding. However, smaller projects are given higher priority. Generally grants range $10,000 up to $500,000.   

Specifically targeted at Business Incubators in rural areas:Must be a non-profit

Rural Business Opportunity Grants (RBOG)

         For non profits or rural local governments-more

Renewable Energy for America Program (REAP)

         Provides guaranteed loan financing and grant funding to agricultural producers and rural small              businesses for renewable energy systems or to make energy efficiency improvements.-more

Eligibility

• Agricultural producers with at least 50% of gross income coming from agricultural operations, and
• Small businesses in eligible rural areas: must generate renewable energy -wind/soloar etc.

Rural Microentrepreneur Assistance Program (RMAP) 

• Provide microloans to help microenterprises startup and growth through a Rural Microloan Revolving Fund -more
• Provide training and technical assistance to microloan borrowers and micro entrepreneur

Biorefinery Assistance Program (BAP) -more and even more

is a Department of Energy program administered by the USDA 

USDA Rural Development is offering loan guarantees for the development, construction, and retrofitting of commercial-scale bio refineries. 

• Eligible borrowers include individuals, entities, Indian tribes, state or local governments, corporations, farm cooperatives or farm cooperative organizations, associations of agricultural producers, National Laboratories, institutions of higher education, rural electric cooperatives, public power entities, and consortium of any of these types of entities. 
• Financed entities must provide at least 20% of the financing for eligible project costs, 
• applications for funding must include an independent feasibility study and technical assessment.  
• Eligible project costs include the purchase and installation of equipment, construction or retrofitting costs, permit and licensing fees, working capital, land acquisition, and the costs of financing.

The project must meet the following requirements:

• Must be for the development and construction or the retrofitting of a commercial-scale biorefinery using an eligible technology
• Must use an eligible feedstock for the production of advanced biofuels and biobased products
• The majority of the production must be an advanced biofuels.

Eligible advanced biofuels include:

• Biofuel derived from cellulose, hemicellulose, or lignin, or other fuels derived from cellulose
• Biofuel derived from sugar, starch, excluding ethanol derived from from corn kernel starch
• Biofuel derived from waste material, including crop residue, vegetative waste material, animal waste, food waste, and yard waste
• Diesel fuel derived from renewable biomass, including vegetable oil and animal fat
• Biogas, including landfill gas and sewage waste treatment gas, produced through the conversion of organic matter from renewable biomass

Rural Community Development Initiative (RCDI) this program is now closed

Grant program for rural municipalities and groups: To improve housing, community facilities, and community and economic development projects in rural areas

Rural Economic Development Loans (REDL)This program is authorized by the Rural Electrification Act of 1936, and is Administered by the USDA

USDA provides grants to local utility organizations which use the funding to establish revolving loan funds (RLF). Loans are made from the revolving loan funds to projects that will create or retain rural jobs. When the revolving loan fund is terminated, the grant is repaid to USDA.

• The utilities, called "intermediaries" in the terms of the the program,are the receivers of the loans but not the benificieries
• Program intermediaries pass the funding to ultimate recipients on to eligible projects. Examples of eligible projects include:
  • Business incubators
  • Community development assistance to nonprofits and public bodies (particularly for job creation or enhancement)
  • Facilities and equipment to educate and train rural residents to facilitate economic development
  • Facilities and equipment for medical care for rural residents
  • Start-up venture costs, including, but not limited to, financing fixed assets such as real estate, buildings, equipment or working capital
  • Business expansion
  • Technical assistance

7 CFR, Part 4280.27 and 7 CFR, Part 4280.30 list ineligible uses

• An ultimate recipient may request up to 80% of project cost using REDLG funds, with the remainder provided by the ultimate recipient or the intermediary.  
•  Interest rate is 0% • Maximum term is 10 years 
•  Up to 80% of project cost, with 20% from either the ultimate recipient or the intermediary 
•  The intermediary may incorporate interest rates or administrative loan fees after the funds have been loaned out and revolved once.
•  First time around all loans are at zero interest. 
•  Repayment may be deferred up to two years  -more

limitations:

(a)Conflict of interest. The Intermediary must not own or manage any Ultimate RecipientProject, unless the Project is acquired as a result of servicing a loan made from the Revolving Loan Fund.

Rural Economic Development Grants (REDG)-  more

USDA provides grants to local utility organizations which use the funding to establish revolving loan funds (RLF). Loans are made from the revolving loan funds to projects that will create or retain rural jobs. When the revolving loan fund is terminated, the grant is repaid to USDA.