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Any legal entity, including individuals, public and
private organizations, and federally recognized Indian
tribal groups may borrow.
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Collateral is required. It must be of such nature that,
when considered with the integrity and ability of the
project management, the soundness of the project, and the
applicant's prospective earnings, repayment of the loan will
be reasonably assured. All collateral must secure the entire
loan.
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The applicant will be required to furnish sufficient cash
or other assets to provide reasonable assurance of a
successful project. A minimum tangible balance sheet equity
of 10 percent is required. Balance sheet equity of at least
20-25 percent will be required for new businesses,
businesses without full personal or corporate guarantees,
and energy related businesses.
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Business and industry loans can be guaranteed in the 50
States, Puerto Rico, the Virgin Islands, Guam, American
Samoa, and the Commonwealth of the Northern Marinas, except
in cities of 50,000 or more and other adjacent urban or
urbanized areas. USDA makes the "rural area" determination,
and gives priority to applications for loans in open
country, rural communities, and towns of 25,000 or less.
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Business and industry loans are limited to a maximum of
$10 million.
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Final maturity will not exceed:
- 7 years for working capital interest will be
due at least annually after the loan is closed.
- 15 years for machinery or equipment, or the
useful life of the machinery and equipment,
whichever is less.
- 30 years for land, building and permanent
fixtures.
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The interest rate for guaranteed loans may be either
fixed or variable and will be determined between the lender
and the borrower subject to USDA review and approval.
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The basic users include developing or financing business
or industry, increasing employment and controlling or
abating pollution. Uses include but are not limited to:
- Financing business and industrial
construction, conversion, acquisition and
modernization.
- Financing the purchase and development of
land, easements, equipment, facilities,
machinery, supplies or materials.
- Providing startup and working capital.
- Financing housing development sites.
- Financing processing and marketing
facilities.
- Controlling pollution.
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B & I funds may not be used for certain purposes,
including:
- Any project likely to result in the transfer
of business or employment form one area to
another.
- Any project likely to cause production that
exceeds demand..
- Any project involving transfer of ownership,
unless this will keep a business from closing,
prevent the loss of jobs in an area, or provide
more jobs.
- Paying a creditor more than the value of the
collateral.
- Guarantee of lease payments.
- Payment of loan proceeds to owners,
partners, shareholders, or others who retain any
ownership in the business.
- Corporations and businesses that are not
owned and controlled by U.S. citizens.
- Agricultural production.
- Charitable and educational institutions.
- Churches or church sponsored organizations.
- Fraternal organizations.
- Hotels, motels, and tourist homes and
convention centers.
- Tourist, recreation and amusement
facilities.
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Borrowers and lenders must comply with Federal
requirements relating to equal employment opportunity,
historic site preservation, flood and mud slide protection,
environment impact, the Clean Air and Water Act, the
Architectural Barriers Act and nondiscrimination.
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