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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

Assistance considerations...

Length and Time Phasing of Assistance

The letter of conditions for the direct loan and the Conditional Commitment for the guaranteed loan specifies the time limit for the use of funds. The Loan Note Guarantee for a guaranteed loan will be issued when all of the requirements of the Conditional Commitment have been or will be met.

Formula and Matching Requirements

Matching funds are not required. For existing businesses, applicants are required to provide a minimum of 10 percent tangible balance sheet equity for guaranteed and direct loans. For new businesses, at least 20 percent is required for guaranteed loans. For direct loans, new businesses and those businesses which cannot offer personal or corporate guarantees, or for energy- related businesses, 20-25 percent equity is required. Feasibility studies are normally required. Exceptions to the feasibility study requirement may be made to businesses with adequate financial history.

A formula may be based on population, per capita income, and other statistical factors. Applicants are informed whether there are any matching requirements to be met when participating in the cost of a project. In general, the matching share represents that portion of the project costs not borne by the Federal government. Attachment F of OMB Circular No. A-102 (Office of Management and Budget) sets forth the criteria and procedures for the evaluation of matching share requirements which may be cash or in-kind contributions made by State and local governments or other agencies, institutions, private organizations, or individuals to satisfy matching requirements of Federal grants or loans.

Cash contributions represent the grantees' cash outlay, including the outlay of money contributed to the grantee by other public agencies, institutions, private organizations, or individuals. When authorized by Federal regulation, Federal funds received from other grants may be considered as the grantees' cash contribution.

In-kind contributions represent the value of noncash contributions provided by the grantee, other public agencies and institutions, private organizations or individuals. In-kind contributions may consist of charges for real property and equipment, and value of goods and services directly benefiting and specifically identifiable to the grant program. When authorized by Federal legislation, property purchased with Federal funds may be considered as grantees' in-kind contribution.

Maintenance of effort (MOE) is a requirement contained in certain legislation, regulations, or administrative policies stating that a grantee must maintain a specified level of financial effort in a specific area in order to receive Federal grant funds, and that the Federal grant funds may be used only to supplement, not supplant, the level of grantee funds.