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USDA Rural Development Loan and Grant Programs in Georgia FY 2005 Accomplishments

In FY 2005, USDA Rural Development invested over $168 million in Georgia through various loan and grant programs, including single family housing, community programs, business programs, and multi-family housing programs.

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USDA Rural Development Loan and Grant Programs in Georgia FY 2005 Accomplishments

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

  2. USDA - RURAL DEVELOPMENT FY 2005 LOAN AND GRANT PROGRAMS INVESTED OVER $168 MILLION IN GEORGIA

  3. FY 2005 ACCOMPLISHMENTSTHROUGH 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

  4. Rural Business-Cooperative Service CaseloadAll Programs As of September 30, 2005 NH 73 ME 294 VT WA 170 124 MT 226 ND 166 MA 119 MT 197 MN 381 NY 248 OR 153 WI 346 ID 189 SD 202 MI 260 RI 32 WY 126 97 CT PA 287 IA 317 OH 271 NJ 68 NE 260 IN 172 DE 42 WV 195 NV 45 IL 309 VA 116 MD UT 86 CO 274 110 KS 196 KY 228 MO 327 CA CA 545 NC 470 TN 351 SC 210 OK 242 AR 128 AZ 96 NM 120 GA 329 AL 179 MS 184 AK 105 LA 212 TX 203 WP 32 FL 167 PR 103 HI 117 VI 22 $8M - $50M >$50M - $100M >$100M - $150M >$150M - $200M >$200M - $250M >$250M - $600M Total Cases: 10,324 Total Funds: $ 6, 962,350,453

  5. 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.

  6. 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.

  7. 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.

  8. 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).

  9. ELIGIBLE APPLICANTS Public entities (towns, communities, State agencies, authorities, Indian tribes); Private nonprofit corporations; NOT cooperatives unless organized as a private nonprofit corporation.

  10. 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)

  11. 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

  12. 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

  13. 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

  14. 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.

  15. 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

  16. 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.

  17. REDLG – ELIGIBLE APPLICANTS • 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

  18. 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

  19. 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.

  20. 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

  21. 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.

  22. 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

  23. 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

  24. 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

  25. ELIGIBLE PURPOSES (RBOG) • 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

  26. 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*

  27. USDA Funding Assistance for Rural Renewable Energy (RE) and Energy Efficiency (EE):Section 9006PURPOSE:To help agricultural producers and small businesses reduce energy costs and consumption through the purchase of RE systems or installation of EE improvements

  28. 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.

  29. 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.

  30. 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.

  31. 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”

  32. 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.

  33. ELIGIBLE APPLICANTS • Nonprofit corporations including institutions of higher education

  34. 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.

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

  36. 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

  37. ELIGIBLE GRANT PURPOSES For planning activities and working capital for marketing value-added agricultural products and for farm-based renewable energy.

  38. ELIGIBLE APPLICANTS • independent producers • farmer and rancher cooperatives • agricultural producer groups • and majority-controlled producer-based business ventures

  39. MATCHING FUND REQUIREMENT • Cash or confirmed funding commitments from non-federal sources • Must be at least equal to the grant amount

  40. COOPERATIVE DEVELOPMENT PURPOSE: To help residents form new cooperative businesses and improve the operations of existing cooperatives.

  41. 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

  42. PURPOSE: Alleviate poverty and increase economic activity through low-interest loans to small businesses and community development projects in a rural area. INTERMEDIARY RELENDING PROGRAM(RD INSTRUCTION 4274-D)

  43. ELIGIBLITY REQUIREMENTS - INTERMEDIARY - (RD INSTRUCTION 4274-D, SECTION 4279.307) • Private non-profit corporations • Public agencies • Indian groups • Cooperatives

  44. 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.

  45. 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).

  46. 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.

  47. 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)

  48. 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

  49. 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.

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