AGENCY: Rural Development
Business and Industry (B&I) Guaranteed Loan Program
Type:Guaranteed Loans
Max Award:
Big Idea:The purpose of the B&I program is to help new and existing businesses based in rural areas gain access to affordable capital. By issuing a guarantee to a private lender, USDA essentially co-signs the loan to a business owner, promising to pay a portion of any loss that might result in case the business owner is unable to repay the loan. Having the guarantee lowers the lender's risk, allowing more favorable interest rates and terms to be offered.
Who can apply:For the purposes of the B&I program "rural area" is defined as any area except a city or town where the population exceeds 50,000 or any urbanized area contiguous or adjacent to a town of greater than 50,000.
- Not for profit etc.:Only lending institutions are eligible, if you have questions about the eligability of your lending institution contact your local RD office. You can find your local office at : http://www.rurdev.usda.gov/recd_map.html.
- Bus. & Individuals:The recipient of a loan guarantee is a lender, making a loan in an eligible rural area to any of the following business owners: cooperatives, non-profit organizations, corporations, partnerships, or other legal entities; Indian tribes on a federal or state reservation or other federally-recognized tribes or groups; public bodies; or individuals.
Can you see an opportunity where you live?:The 2008 Farm Bill placed a special emphasis on supporting locally and regionally produced agricultural food products through a set-aside within the B&I Loan Program for initiatives that establish and facilitate the processing, distribution, aggregation, storing and marketing of locally or regionally produced food products. Any agricultural product that is distributed and marketed within the State or within 400 miles of where it is produced is considered a "locally or regionally produced agricultural food product."
- Real Examples:Monogram Meat Snacks LLC, a division of Monogram Food Solutions LLC, operates a meat processing facility in Chandler, MN (population 276). The company manufactures various types of beef jerky and meat snacks, smoked sausage, and hot dogs out of this facility. They are the largest private employer in Murray County and attract employees from all over southwestern Minnesota and southeastern South Dakota. In 2008, Monogram issued $4.4 Million of taxable bonds purchased by AgStar Financial Services using the Mission Related Investment authorities for the Farm Credit System. The funds were used to provide a large remodel of the facility as well as purchase numerous equipment items to add significant production capacity to the facility. These bonds were guaranteed by the USDA under the B&I program, thus making the project a reality. Monogram continued to have increased facility expansion and production capacity needs identifying another $4 Million of capital expenditure slated for 2009. The initial USDA experience with Monogram and AgStar was positive, so another B& I application was submitted to USDA during August of 2009. AgStar is scheduled to purchase another $2 Million of taxable bonds guaranteed by the USDA by the end of September to help fund the project along with other financing provided by the State of MN, Murray County, and a regional economic development group. Monogram's influence in southwestern Minnesota has been extremely positive. They have provided numerous new jobs over the past few years in a time when other firms have been cutting back or going out of business. They purchase meat for their products from various packers in the area and beyond, which indirectly provides additional opportunities for beef, swine, and poultry producers. Besides providing the obvious economic benefits to area residents, Monogram has also become a source of pride for the community knowing that products manufactured in Chandler, MN are sold through the entire United States.
- Possibilities:Loans can be used for a wide variety of business-related activities. Including:
- Business conversion, enlargement, repair, modernization, or development
- Purchase and development of land, easements, rights-of-way, buildings or facilities
- Purchase of equipment, leasehold improvements, machinery, supplies, or inventory.
- Working capital and debt refinancing
Get more information: To apply for any USDA Rural Development Programs, contact your state or local office: http://www.rurdev.usda.gov/recd_map.html. For more program information: http://www.rurdev.usda.gov/rbs/busp/b&i_gar.htm
