(Shared by Kelly O’Bryant, Business Development Specialist, Small Business Development Center, OSU South Centers)
Rural Development is pleased to announce important changes to the Business & Industry (B&I) Loan Guarantee Program. These changes will better serve rural communities by helping lenders provide loans to businesses and helping to increase employment opportunities for rural residents. These changes include but are not limited to:
- Removal of the U.S. Citizenship requirement for companies wanting to use the B&I loan guarantee to increase employment in rural areas. The applicant company will need to demonstrate the loan funds will remain in the United States and will be invested in the rural community to create and retain employment opportunities.
- Owner subordinated debt may be included as equity provided the debt was established in exchange for cash and the debt remains in the company for the life of the guaranteed loan. This change can help applicants meet the minimum tangible balance sheet equity requirements of the program. Minimum tangible balance sheet equity for an existing business is 10% while a startup business is 20%. All financial statements must be prepared according to Generally Accepted Accounting Principles.
- New Market Tax Credit projects are now be eligible for assistance through the B&I program. Subordinated debt made by the Community Development Entity can be considered as equity into a project. This is another means of helping the business meet the minimum tangible balance sheet equity requirements.
- The guarantee fee can be reduced to 1% of the guaranteed portion for businesses that support value added agriculture; promotes access to healthy foods; or is a high impact business development investment.
- Loan guarantees can for agricultural production can be 50% or $5MM, whichever is less, of vertically integrated businesses. This is a substantial increase from the previous agricultural production maximum amount of $1,000,000.
Should you have any questions regarding these changes or if you would like additional information on the B&I Loan Guarantee Program, please contact one the Business Programs Staff listed below. We are willing to provide training or outreach on these new regulations should that be necessary to effectively implement this program within your organization.
Christie Hooks Christie.Hooks@oh.usda.gov 614-255-2397
Cindy Musshel Cindy.Musshel@oh.usda.gov 614-255-2427
Debbie Rausch Deborah.Rausch@oh.usda.gov 614-255-2425
Jennifer Brown Jennifer.Brown@oh.usda.gov 614-255-2423
Randy Monhemius Randy.Monhemius@oh.usda.gov 614-255-2424