USDA Rural Development Business Programs

Assistance for Businesses • Business & Industry Guaranteed Loans (B&I)

• Rural Energy for America Program (REAP)

• Rural Economic Development Loan (RED-L)

• Value Added Producer Grants (VAPG)

Business & Industry (B&I) Guaranteed Loans • National Program Funding

• $1.0 billion

Business & Industry Guaranteed Loan Totals in Kansas Fiscal Year Amount

2015 $17,900,000

2014 $13,000,000

2013 $9,600,000

2012 $16,600,000

2011 $20,500,000

2010 $56,700,000

2009 $ 7,370,000

B&I Eligibility • Location

• Borrower/Entity

• Type of Project

B&I Eligible Areas • Population of 50,000 or less

• 2010 census and maps used

B&I Eligible Borrowers • Type of entity

• Citizenship

• Rural Area

B&I Past Projects in Kansas • Manufacturing

• Retail Business

• Hotel

• Professional Health Care Office

B&I Eligible Loan Purposes • Expansion

• Machinery & Equipment

• Business Purchases

• Construction Costs

• Start up working capital • Not line of credit

B&I Eligible Loan Purposes • Refinancing

• Some limitations, including – when necessary to improve cash flow and create or save jobs

• Agricultural Production • Fully integrated business

• Tourist and Recreational Facilities

• Packaging Fees

B&I 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

B&I Loan Rates and Terms • Rate

• Lender and 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 and improvements

B&I 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)

B&I Loan Fees • Guarantee Fee: 3% x loan x% of guarantee

• Paid when guarantee is issued

• ½% annual renewal fee

• Other Loan Charges allowed • Routine Lender Fees/Professional Services

B&I Program • 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

• B&I Guaranteed Loan Recipient

• Sharp Bros Seed Company located in Healy, Kansas

Rural Energy for America Program (REAP) Renewable Energy Systems & Energy Efficiency Improvements Program

• Grants

• Guaranteed Loans

Eligible Applicants

The technology must be commercially available. Research and development projects do not qualify.

Improve Profits for Your Rural Small Business, Farm or Ranch with REAP

REAP Grant Assistance • Up to 25% of Eligible Project Cost

REAP Guaranteed Loan Assistance • Up to 75% of Eligible Project Costs

Minimum Loan Amount $5,000 Total eligible project costs ≥ $6,667

Maximum Loan Amount $25 million Total eligible project costs ≥ $33.4 million

Details • USDA guarantees a commercial loan, applicant must have a willing lender

• Terms are negotiated between the lender and borrower

• Fees, appraisals, equity and collateral requirements apply

REAP Application Window Closing Deadlines October 31 Grant requests $20,000 or less

April 30 • Grant request $20,000 or less • Grant request ˃ $20,000 • Combination Grant/Loan Request

Continuous Application Cycle • Guaranteed Loans • Loan must score a minimum of 50 to

compete monthly • First monthly competition held once eight

applications are on file

Chicken Farm REAP Energy Efficiency

Radiant heat, fans, vents and computerized controls

• $99,293 Total Cost

• $20,000 REAP Grant

• $79,293 Commercial Loan

Improved egg production, reduced time and labor, energy savings

Veterinary Hospital Renewable Energy

Rooftop solar panels

• $148,050 Total Cost

• $ 20,000 REAP Grant

• $128,050 Applicant Funds

30-40% reduction in operating expenses

Laundromat & Dry Cleaner Energy Efficiency

Energy efficient equipment

• $42,040 Total Cost

• $10,510 REAP Grant

• $31,531 Dealer Financing

52% energy savings

Nursery Energy Efficiency

Energy efficient glass roof, radiant heat, fans, vents, & computerized controls

• $287,855 Total Cost

• $ 71,964 REAP Grant

• $100,000 REAP Guarantee

• $115,891 Commercial Loan

40% reduction in energy costs

Grocery Store

Energy efficient cooler doors

• $41,363 Total Cost

• $8,827 REAP Grant

• $2,950 Electric Co-op Rebate

$500 per month savings

Rural Manufacturer

Efficient lighting system

• $78,511 Total Cost

• $19,695 REAP Grant

• $58,816 Applicant Funds

50% savings on lighting bill

Grocery Store Renewable Energy

Geothermal heat, energy efficient coolers and lighting

• $198,600 Total Cost

• $49,650 REAP Grant

• $148,950 Commercial Loan

40% reduction in energy costs

Flower & Gift Shop Energy Efficiency

Energy efficient heating and cooling, insulation

• $34,509 Total Cost

• $8,627 REAP Grant

• $17,200 REAP Guarantee

• $8,682 Applicant Funds

60% reduction in energy costs

How to Apply • Contact a USDA Rural Development Business Program Specialist:

Doug Bruggeman, Katie Casper, Travis Snider or David Kramer

• REAP application forms are available at: http://www.rd.usda.gov/programs-services/rural-energy-america-program-renewable-energy-systems-energy-efficiency/ks

• Submit applications any time of year

• Applications compete for funding based on score throughout the year

Rural Economic Development Loan & Grant Program

REDLG Program Overview • Loan up to 80% of a project cost

• Project must be in a rural area

• National competition for funds (monthly)

REDLG Program Overview • Loan made to ‘eligible’ Electric or Telecom intermediaries that

re-lend/pass loan on to a business

• Intermediary may charge 1% fee and require letter of credit to secure their loan

• $1 million maximum loan in federal fiscal year 2015

• Repayment over 10 years

Schwinn Produce Farm & The Barn in Leavenworth, Kansas.

Value Added Producer Grant Program (VAPG)

VAPG • Value-Added Producer Grants assist agricultural producers enter into

value-added activities related to the processing and/or marketing of value-added products

• Working Capital up to $250,000

• Planning grants up to $75,000

• Requires a $1 producer match for each grant $1

VAPG • Eligible Applicants

• Independent producers, Farmer and rancher cooperatives, Agricultural producer groups, Majority controlled producer-based business ventures

• Funds Can Be Used For: • Processing cost • Marketing and advertising expenses • Some inventory and salary expenses

• VAPG funds cannot be used to build facilities, produce the raw commodity or purchase equipment

VAPG • Start working with us today on the application

• Contact Nancy Pletcher (785) 271-2733 nancy.pletcher@ks.usda.gov

Gary’s Berries in Grantville, Kansas.

Wiebe Dairy in Durham, Kansas.

Wine Barn Winery and Vineyard is located in Kansas City, Kansas.

Nu Life Market based in Scott City, Kansas.

• Randy Snider, Business Programs Director, Iola Area Office, (620) 365-2901, Ext. 1430, randy.snider@ks.usda.gov

• Doug Bruggeman, Business Programs Specialist, Hays Area Office, (785) 628-3081, Ext. 1435, doug.bruggeman@ks.usda.gov

• Katie Casper, Business Programs Specialist, Iola Area Office, (620) 365-2901, Ext. 1427, katie.casper@ks.usda.gov

• David Kramer, Business Programs Specialist, Topeka State Office, (785) 271-2700, Ext. 2736, david.kramer@ks.usda.gov

• Nancy Pletcher, Business Programs Specialist, Topeka State Office, (785) 271-2700, Ext. 2733, nancy.pletcher@ks.usda.gov

• Travis Snider, Business Programs Specialist, Newton Area Office, (620) 316-283-0370, Ext. 1439, travis.snider@ks.usda.gov

USDA RD Business Programs Staff in Kansas