Leroy J. Debes of U.S. Department of Agriculture - Rural Development Business and Economic Development Loans -- Loan Guarantees -- Grants LeRoy J. Debes, Area Specialist 509-924-7350 Ext. 115 leroy.debes@wa.usda.gov Committed to the future of rural America Rural Development is an Equal Opportunity Lender, Provider, and Emplo WINERY & WINE DISTRIBUTION LAW A August t5 5, 2008 USDA RURAL DEVELOPMENT www.usda.rurdev.gov www.usda.rurdev.gov/wa Speaker 26b: 1
http://eligibility.sc.egov.usda.gov/eligibility/ Sharon Exley
Leroy J. Debes of U.S. Department of Agriculture - Rural Development Business & Industry (B&I) Loan Guarantee Govt Guarantee Loan Sizes 80% up to $5,000,000 70% $ 5 mil. Ù $10 mil. 60% $10 mil. Ù $25 mil. Other credit factors Improve Loan Structure Rural Community < 50,000 population Speaker 26b: 3
Rates & Terms Interest Rates: variable or fixed Maximum Terms < useful life of collateral: o Real estate.. < 30 years o Machinery & Equipment < 15 years o Working Capital.. < 7 years
B&I Guarantee Fees Initial Fee 2% $4 mil. x80%x2%= $48,000 Annual Fee 1/4 of 1% $3.5 mil. x 80% x.0025% = $7,000 No SBA 7(a) examination, review, oversight fees Land & Buildings Eligible Purposes Equipment & Machinery Expansion, Repairs, Modernization Acquire Existing Business Leasehold Improvements Inventory Development to Lease Term Working Capital Take-out of Interim Financing Refinance Existing Debt (limited)
Owner Contributions EQUITY: 20%+ New Business Start Up 10%+ Existing Business Balance Sheet Pro Forma TANGIBLE EQUITY GAAP Financial Statements Collateral l & Personal Guarantors BUSINESS PLAN (Feasibility Study?) _ Experience _Management _Repay History _ Environmental Compatible Project Intermediary Relending Program Rural Revolving Loan Funds Test of Credit Reasonable Chance to Succeed Collateral Rural < 25,000 population Loan Size < $250,000 Contact
Leroy J. Debes of U.S. Department of Agriculture - Rural Development Rural Business Enterprise Grant Rural Economic Development Assist Small and Emerging Private Business <$1M annual revenue Eligible Applicants: _Public Public Entities _Non-Profits Non Profits _Tribes Tribes Administration by Grantee No Grant $ To Private Businesses Rural Business Enterprise Grant?? Analysis?? Problem Solving Speaker 26b: 7
Rural Energy for America Program = REAP RENEWABLE ENERGY SYSTEMS: Biomass Bioenergy & Biofuels Anaerobic Digester Geothermal Hydrogen Solar Wind ENERGY EFFICIENCY IMPROVEMENTS Eligible Costs: Post-Application Costs Professional Fees Feasibility Studies??
Energy Loan Guarantee & Grant Eligible Applicants: 1. Agricultural Producers 50%+ gross income farm operations 2. Rural Small Businesses SBA size: Wineries 500 employees Wine wholesalers 100 employees Retail $6.5 million sales Equity Required in Energy MINIMUM Owner EQUITY: 25% cash in project for LOANS > $600,000 15% cash LOANS < $600,000 All 75% for GRANTS CASH EQUITY: Cash Federal & other grants from other sources Loans & funds from other sources Real Property Market Value collateral for loan
Energy Competitive Solicitation: Maximum/Project GRANT LOAN GUARANTEE renewable system $500,000 000 $ 10 mil. efficiency improvements $250,000 $ 10 mil. Not to exceed: 25% 50% Combined Grant + Loan 50%... FUNDING 2009 est. $30 mil. $400 mil. Applications deadline Ag Value-Added Producer Grants FARM BILL 2000; 2002-08; 2009 Farmer Producers Retain Ownership Process & add value to agri commodities increase profits Emerging Markets Yr. 2009 est. $40 mil. Compete Nationally USE OF FUNDS: (a) Planning (Feasibility, Business, Marketing) or (b) Working Capital ( ) Not for equipment or buildings
Value Added Producer Grant Eligible Applicants: Independent Producers (corp., partners...) Cooperatives Associations Majority-Controlled Producer Groups Maximum Grants: 50% of eligible project costs Awards Amounts / Project: Planning $2,500 Work Capital $500,000 Business and Economic Development Loans -- Loan Guarantees Grants LeRoy J. Debes Area Specialist 509-924-7350 Ext. # 115 leroy.debes@wa.usda.gov www.usda.rurdev.gov www.usda.rurdev.gov/wa