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Business and Industry Loans

Published on AidPage by IDILOGIC on Jun 24, 2005

Administered by:

US Federal Government Agency (see all agencies)
Department of Agriculture , Rural Business-Cooperative Service
CFDA #: 10.768

Possible uses and use restrictions...

Direct loans may be extended for: (a) modernization, development costs; (b) purchasing and development of land, easements, rights-of-way, buildings, facilities, leases or materials; purchasing equipment, leasehold improvements, machinery and supplies; and (d) pollution control and abatement. Maximum loan size is $10 million and maximum time allowable for final maturity is limited to 30 years for land and buildings, the usable life of machinery and equipment purchased with loan funds, not to exceed 15 years, and 7 years for working capital. Interest rates for direct loans change quarterly and are equal to the prime interest rate in effect on the day the change is announced. Loans may not be made (a) to pay off a creditor in excess of the value of the collateral; (b) for distribution or payment to the owner, partners, shareholders, or beneficiaries of the applicant or members of their families when such persons shall retain any portion of their equity in the business; (c) for projects involving agricultural production; (d) for the transfer of ownership of a business unless the loan will keep the business from closing, or prevent the loss of employment opportunities in the area, or provide expanded job opportunities; (e) for financing community antenna television services or facilities; (f) for charitable and educational institutions, churches, fraternal organizations, hotels, motels, tourist homes, convention centers, tourist, recreation or amusement facilities, lending and investment institutions and insurance companies; (g) for any legitimate business activity where more than 10 percent of the annual gross income is derived from legalized gambling; and (h) for any project which is likely to result in the transfer of business or employment from one area to another or cause production which exceeds demand. Guaranteed loans may be extended for: (a) modernization, development costs; (b) purchasing and development of land, easements, rights-of-way, buildings, facilities, leases or materials; (c) purchasing equipment, leasehold improvements, machinery and supplies; (d) projects involving agricultural production, when not eligible for Farm Service Agency farmer program assistance and when it is part of an integrated business also involved in the processing of agricultural products and the agricultural production portion of the loan does not exceed the lessor of 50 percent of the total loan or $1 million; and (e) pollution control and abatement. Maximum loan size is $25 million and maximum time allowable for final maturity is limited to 30 years for land and buildings, the usable life of machinery and equipment purchased with loan funds, not to exceed 15 years, and 7 years for working capital. Interest rates for guaranteed loans are negotiated between the lender and the borrower. For loans of $5 million or less, the maximum percentage of guarantee is 80 percent. For loans over $5 million but not over $10 million, the maximum percentage of guarantee is 70 percent. For loans in excess of $10 million up to $25 million, the maximum percentage of guarantee is 60 percent. Losses on principal advanced, including protective advances, and accrued interest, may be guaranteed by the Agency, but the maximum loss paid by RBS will never exceed the original principal plus accrued interest. Loans may not be made for: (a) distribution or payment to the owner, partners, shareholders, or beneficiaries of the applicant or members of their families when such persons shall retain any portion of their equity in the business; (b) the transfer of ownership of a business unless the loan will keep the business from closing, or prevent the loss of employment opportunities in the area, or provide expanded job opportunities; (c) the guarantee of lease payments; (d) charitable institutions, churches, fraternal organizations, lending and investment institutions and insurance