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B_I 4-20-04 Pratt_ KS by wuxiangyu

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									USDA Rural Development (RD)

          David Kramer
   Business Programs Specialist
   david.kramer@ks.usda.gov

    (RD State Office, Topeka)
                                                                        USDA Rural Development, Kansas
            Area Office Locations                                                  Area Offices (2010)

 CHEYENNE              RAWLINS            DECATUR       NORTON      PHILLIPS    SMITH          JEWELL        REPUBLIC          WASHINGTON        MARSHALL      NEMAHA         BROWN
                                                                                                                                                                                         DONIPHAN


                                                                                                             CLOUD                                                                 ATCHISON
                                                                                               MITCHELL                                             POTTAWATOMIE
  SHERMAN              THOMAS             SHERIDAN      GRAHAM      ROOKS       OSBORNE                                                                             JACKSON
                                                                                                                               CLAY      RILEY                                                   LEAVENWORTH
                                                                                                                                                                                 JEFFERSON

                                                                                                             OTTAWA                                                                                       Wyandotte
                                                                                               LINCOLN
WALLACE            LOGAN                  GOVE          TREGO       ELLIS       RUSSELL                                                     GEARY       WABAUNSEE    SHAWNEE
                                                                                                                           DICKINSON                                               DOUGLAS         JOHNSON
                                                                                                             SALINE
                                                                                               ELLSWORTH                                    MORRIS
                                                                                                                                                                        OSAGE
                                                                                                                                                                                      FRANKLIN     MIAMI
GREELEY      WICHITA       SCOTT          LANE        NESS          RUSH        BARTON                                                                      LYON
                                                                                                            McPHERSON
                                                                                                 RICE                          MARION          CHASE
                                                                                                                                                                        COFFEY
                                                                    PAWNEE                                                                                                         ANDERSON        LINN
                                 FINNEY              HODGEMAN
HAMILTON     KEARNY                                                                                                   HARVEY
                                                                                  STAFFORD         RENO
                                                                    EDWARDS                                                                            GREENWOOD     WOODSON       ALLEN
                                                                                                                                                                                                   BOURBON
                                          GRAY                                                                                          BUTLER
                                                        FORD                    PRATT                            SEDGWICK
STANTON        GRANT       HASKELL                                    KIOWA                    KINGMAN                                                               WILSON        NEOSHO
                                                                                                                                                                                                   CRAWFORD
                                                                                                                                                         ELK

                                                                                                                 SUMNER               COWLEY
MORTON       STEVENS         SEWARD         MEADE       CLARK       COMANCHE    BARBER             HARPER                                                           MONTGOMERY LABETTE             CHEROKEE
                                                                                                                                                       CHAUTAUQUA



      (contact Hays Area Office)                          Hays Area Office (#1)                                           Manhattan Area Office (#2)
     Garden City Area Office (#5)                        2715 Canterbury Drive                                            3705 Miller Parkway, Suite A
               2106 E Spruce                                   Hays, KS 67601                                                  Manhattan, KS 66503

                                                                                          Newton Area Office (#4)                                                     Iola Area Office (#3)
                                                                                             1405 S Spencer Road                                                        202 W Miller Road
                                                                                              Newton, KS 67114                                                           Iola, KS 66749
Business Programs ( B&I,              REAP/9007 )
            Agency Contacts:
• Newton (Area Office)
   – Doug Clary             316-283-0370
• Manhattan (Area Office)
   – Larry Holz             785-776-7582
• Iola (Area Office)
   – Katie Casper           620-365-2901
• Hays (Area Office)
   – Brandon Prough         785-628-3081
• Topeka (State Office)
   – David Kramer           785-271-2736
Business & Industry
      (B&I)
  Guaranteed Loan
     Program
    Business & Industry (B&I)
 Program Funding Levels (Nationally)



 Program Funding Growth:
- Fiscal year 2010 program
             Government
           Guaranteed Loans
• Government supports the lender (credit enhancement)
• Guarantees require fewer tax dollars than direct loans
• Guarantees create “effective” capital for lenders

• Two primary programs are SBA and USDA
• USDA program - Loan limits are much larger with
                  maximum loan size of $25 million.
                - No minimum loan size
B&I LOAN PROGRAM      Benefits to
         Borrower/Business
• Better terms than conventional loans
  – Longer repayment terms
     (fully amortized loans)
  – Possible higher loan to discounted
      collateral values
  – Smaller equity requirements
• Liquidity & improved cash flow
           B&I LOAN PROGRAM
             Benefits to Lender
• Government absorbs up to 80% of
  potential loan losses (risk sharing tool)
• Only non-guaranteed portion impacts legal
  lending limit (another tool to expand loan portfolio)
• Guarantee strengthens loan portfolio
• Opportunity for immediate liquidity through the
  sale of the guarantee (Increase earnings thru participation in
  the secondary market)
       Business & Industry (B&I)
            Loan Guarantee
Available on the Internet
- B&I Application
    http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD4279-1.PDF
    (or RD can email you the application upon request)

- B&I Instruction (4279-B)
 http://www.rurdev.usda.gov/regs/regs/doc/4279b.doc
           Application Process
                  (brief summary)
Lender originates the loan:
  (Lender Analysis / Commercial Credit Standards)
 - Lender evaluates the proposal
      Cash Flow / Collateral / Equity
      Management / etc.
 - Determine if loan should be made
 - Establish parameters on credit (draft loan agreement)
         Application Process
                 (continued)
- Lender submits application
  to USDA Rural Development (RD)
     * Part A (completed by Applicant / Business)
     * Part B (completed by Lender)
     * # Attachments
             Application Process
                            (continued)
- RD Reviews/Evaluates application material
  provided by lender and applicant
- Completes an internal “Write-up” on loan
- Presents to B&I Loan Committee
- Prepares a Conditional Commitment for
  guarantee, if favorable action
- Issues Guarantee once conditions are met
(loan requests over $10 mill. – must go to National Office Loan Committee)
Basic Eligibility
      Location
  Borrower / Entity
    Type Project
      Eligible Areas
Population of 50,000 or less
   (use 2000 census and maps)
     Eligible Borrowers
- Type of Entity
- Citizenship
- Rural Area
        Types of Projects
          (Funded with B&I Program)
Some past projects funded in Kansas:
- Manufacturing
- Retail Business

     Most all types of businesses
Movie Theater




                22
Lumber Yard




              24
Manufacturing




                28
Assisted Living




                  29
          Eligible Loan Purposes
•   Expansions
•   Machinery & equipment
•   Business purchases
•   Construction costs
•   Start up working capital (not line of credit)
•   Refinancing
    (some limitations, including - when necessary to improve
    cash flow & create or save jobs)
    Ineligible Loan Purposes
•   Line of Credit
•   Owner-Occupied Housing
•   Golf Courses
•   Gambling Facilities
     Percentage of Guarantee

• 80% up to $5 Million
• 70% over $5 Million to $10 Million
• 60% over $10 Million to $25 Million
     Loan Rates & Terms
Rate (Lender & Borrower negotiate) :
 Interest Rates (Fixed or Variable)

Maximum Terms:
- 7 years start up and working capital
- 15 years on machinery and equipment
- 30 years real estate & improvements
           Borrower Equity
                Requirements
• 10% tangible balance sheet equity
  for existing business
• 20% tangible balance sheet equity
  for new business

 USDA RD measures equity in accordance with Generally
 Accepted Accounting Principles (GAAP)
                 Loan Fees
Generally Fees are as follows:
Guarantee Fee: 2% x loan X % of guar.
                    (pd when guar. issued)
                 ¼ of 1% annual renewal fee
Other Loan Charges allowed:
    Routine Lender Fees / Professional Services
               B&I Program
        (clarifications / common misconceptions)

• Inability to obtain other credit is
  NOT a requirement.
• NOT just for rural Areas
   (as many might define a rural area)
• NOT just for agricultural related business
Notes:
    Rural Energy for
    America Program
        (REAP)
Energy Efficiency (EE) Improvements
                or
  Renewable Energy (RE) Systems
     Rural Energy for America
        Program (REAP)
      A program to help
    rural small businesses
  or agricultural producers
 make energy efficiency (EE)
        improvements
or purchase renewable energy
         (RE) systems.
 Energy Efficiency (EE)




Renewable Energy (RE)
            What size of REAP
            Grant is available?
• Not exceed 25% of total eligible project costs
• Minimum grant request
  – Energy Efficiency (EE) improvements - $1,500
  – Renewable Energy (RE) system - $2,500
• Maximum grant request
  – Energy Efficiency (EE) improvements - $250,000
  – Renewable Energy (RE) system - $500,000

             Maximum grants per applicant per fiscal year is
                             $750,000
       What size of REAP
 Guaranteed Loan (GL) is available?
• Not to exceed 50% of total eligible project costs
• Maximum combination GL and grant cannot
  exceed 75% of total eligible project costs
• Minimum GL request is $5,000
• Maximum GL request is $25 million


                 Can combine with up to $25M of Business
                 and Industry GL for larger projects

								
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