Business & Industry Loan Guarantees in California Apply Online
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The "Business & Industry Loan Guarantees" program in California provides loan guarantees to lenders for their loans to rural businesses. Below, I've summarized key information about this program:
Program Purpose: Business & Industry Loan Guarantees in California
The purpose of the "Business & Industry Loan Guarantees" program in California is to support rural economic development by providing loan guarantees to lenders. These guarantees encourage lenders to extend loans to rural businesses, which, in turn, helps these businesses access the necessary capital to start, expand, modernize, or sustain their operations. By facilitating access to affordable financing, this program aims to:
- Stimulate Economic Growth: By promoting lending to rural businesses, the program seeks to stimulate economic growth in rural areas of California, leading to job creation and improved overall economic conditions.
- Encourage Business Development: The program encourages the development and growth of various types of businesses, including for-profit and non-profit entities, cooperatives, and tribal businesses.
- Enhance Rural Communities: By providing financial support to businesses in rural areas, the program contributes to the vitality and sustainability of these communities, helping them thrive and remain viable.
- Facilitate Investment: It allows businesses to secure funding for various purposes, such as expansion, modernization, land and building acquisition, machinery and equipment purchases, and debt refinancing. This, in turn, can lead to increased investments in rural areas.
- Support Job Creation and Preservation: The program focuses on creating new jobs or preserving existing jobs in rural regions, contributing to stable employment opportunities for rural residents.
- Strengthen Business Infrastructure: It supports the development and improvement of commercial and industrial properties, which can enhance the business infrastructure in rural communities.
Eligible Lenders Business & Industry Loan Guarantees in California Apply Online
Lenders must have the legal authority, financial strength, and sufficient experience to operate a successful lending program. This includes various types of financial institutions, both federal and state-chartered, as well as other non-regulated lending institutions approved by the Agency under specific criteria.
Eligible Borrowers Business & Industry Loan Guarantees in California Apply Online
The "Business & Industry Loan Guarantees" program in California is designed to provide loan guarantees to eligible borrowers, which include a range of entities. Eligible borrowers for this program in California include
- For-Profit Businesses: This category includes privately-owned businesses that operate for profit. These businesses can apply for loan guarantees to support their operations, expansion, or other eligible purposes.
- Non-Profit Businesses: Non-profit organizations that engage in business activities and operate in rural areas of California can also qualify for loan guarantees under this program. These organizations may include non-profit businesses, cooperatives, and community-based organizations.
- Federally-Recognized Tribes: Native American tribes that are federally recognized entities are eligible borrowers. They can seek loan guarantees to support various economic development projects within their tribal communities.
- Public Bodies: Government entities or public agencies at the local, state, or tribal level may apply for loan guarantees to finance projects that benefit the rural areas they serve. This can include initiatives aimed at improving infrastructure, services, or economic development.
- Individuals Engaged in Business: Individuals who are involved in or planning to start a business in rural California can also be eligible borrowers. This category is typically reserved for entrepreneurs seeking financial support to establish or grow their rural businesses.
What lenders may apply for this program?
Lenders need the legal authority, financial strength, and sufficient experience to operate a successful lending program. This includes lenders that are subject to supervision and credit examination by the applicable agency of the United States or a State including
- Federal and State-chartered banks.
- Savings and loans.
- Farm Credit Banks with direct lending authority.
- Credit unions.
Other non-regulated lending institutions may be approved by the Agency under the criteria of the OneRD Guarantee Loan Initiative regulation.
Who may qualify for these guaranteed loans?
- For-profit or non-profit businesses.
- Cooperatives.
- Federally-recognized Tribes.
- Public bodies.
- Individuals engaged or proposing to engage in a business.
Overview Business & Industry Loan Guarantees in California
| Aspect | Details |
|---|---|
| Program Purpose | Supports rural economic development by providing loan guarantees to encourage lending to rural businesses. |
| Eligible Borrowers | - For-profit businesses - Non-profit businesses - Cooperatives - Federally-recognized Tribes - Public bodies - Individuals engaged in business in rural areas of California |
| Borrowing Restrictions | - Individual borrowers must be U.S. citizens or reside in the U.S. after being legally admitted for permanent residence. - Private-entity borrowers must ensure loan funds remain in the U.S. and primarily create new or save existing jobs for rural U.S. residents. |
| Eligible Areas | Rural areas not in a city or town with a population of more than 50,000 inhabitants. The borrower's headquarters may be in a larger city, as long as the project is located in an eligible rural area. |
| Loan Uses | Various eligible uses, including business conversion, enlargement, repair, modernization, land and building purchase, machinery and equipment purchase, debt refinancing, and business and industrial acquisitions. Some restrictions apply. |
| Collateral Requirements | Collateral must have documented value sufficient to protect the interests of the lender and the Agency. Hazard insurance is required on collateral. |
| Loan Guarantee Percentage | The loan guarantee percentage may vary but is published annually in a Federal Register notice. In Fiscal Year 2022, it was 80 percent. |
| Loan Terms | Determined by the lender in agreement with the Agency, based on the use of guaranteed loan funds, asset economic life, and borrower's repayment ability. Loan terms cannot exceed 40 years. |
| Interest Rates | Negotiated between the lender and borrower, subject to Agency review. Rates may be fixed or variable, with variable rates adjusted no more often than quarterly. |
| Applicable Fees | - Initial guarantee fee: 3 percent of the guaranteed amount - Annual guarantee retention fee: 0.5 percent of the outstanding principal balance (paid annually) - Loan origination fees negotiated between borrower and lender |
| Underwriting Requirements | Lenders must conduct a credit evaluation using prudent lending practices, including an analysis of credit factors such as character, capacity, capital, collateral, and conditions. |
| How to Get Started | Applications are accepted year-round from lenders through USDA local offices. Interested borrowers should contact their lender. Lenders interested in participating should contact the USDA Rural Development Business Programs Director in the state. |
| Program Oversight | Governed by Code of Federal Regulations, 7 CFR 5001, and authorized by the Consolidated Farm and Rural Development Act, 7 U.S.C. 1932. |
| Program Purpose | Improves the economic health of rural communities by increasing access to business capital through loan guarantees, enabling lenders to provide affordable financing for rural businesses. |
| Contact Information | For questions, contact the local Rural Development office or refer to the contact information provided in the program documentation. |
What are the borrowing restrictions?
- Individual borrowers must be citizens of the United States, or reside in the U.S. after being legally admitted for permanent residence.
- Private-entity borrowers must demonstrate that loan funds will remain in the U.S., and the facility being financed will primarily create new or save existing jobs for rural U.S. residents.
What is considered an eligible area?
- Rural areas not in a city or town with a population of more than 50,000 inhabitants.
- The borrower’s headquarters may be based within a larger city, as long as the project is located in an eligible rural area.
- The lender may be located anywhere in the United States.
- Projects may be funded in either rural or urban areas under the Local and Regional Food System Initiative.
- Check eligible addresses for Business Programs.
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How may guaranteed loan funds be used?
- Business conversion, enlargement, repair, modernization, or development.
- The purchase and development of land, buildings, and associated infrastructure for commercial or industrial properties.
- The purchase and installation of machinery and equipment, supplies or inventory.
- Debt refinancing when such refinancing improves cash flow and creates jobs.
- Business and industrial acquisitions when the loan will maintain business operations and create or save jobs.
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Guaranteed loan funds may NOT be used for
- Lines of credit.
- Owner-occupied and rental housing.
- Golf courses or golf course infrastructure.
- Racetracks or gambling facilities.
- Churches or church-controlled organizations.
- Fraternal organizations.
- Lending, investment, and insurance companies.
- Agricultural production, with certain exceptions (1).
- Distribution or payment to a beneficiary of the borrower or an individual or entity that will retain an ownership interest in the borrower.
What Collateral Is Required?
Collateral must have documented value sufficient to protect the interest of the lender and the Agency. Lenders will discount collateral consistent with sound loan-to-value policy with the discounted collateral value at least equal to the loan amount. The lender must provide satisfactory justification of the discounts being used. Hazard insurance is required on collateral (equal to the loan amount or depreciated replacement value, whichever is less).
- What is the maximum amount of a loan guarantee? :- The loan guarantee percentage is published annually in a Federal Register notice. B&I loans approved in Fiscal Year 2022 will receive an 80 percent guarantee.
- What are the loan terms? :- The lender, with Agency concurrence, will establish and justify the guaranteed loan term based on the use of guaranteed loan funds, the useful economic life of the assets being financed and those used as collateral, and the borrower’s repayment ability. The loan term will not exceed 40 years.
- What are the interest rates? :- Interest rates are negotiated between the lender and borrower. Rates may be fixed or variable. Variable interest rates may not be adjusted more often than quarterly.
- What are the applicable fees? :- There is an initial guarantee fee, currently 3 percent of the guaranteed amount. There is a guarantee retention fee, currently 0.5 percent of the guaranteed portion of the outstanding principal balance, paid annually (2). Reasonable and customary fees for loan origination are negotiated between the borrower and lender. Qualifying projects may receive a reduced fee of 1 percent.
- What are the underwriting requirements? :- The lender will conduct a credit evaluation using credit documentation procedures and underwriting processes that are consistent with generally accepted prudent lending practices and, also consistent with the lender’s own policies, procedures, and lending practices. The lender’s evaluation must address any financial or other credit weaknesses of the borrower and project and discuss risk mitigation requirements. The lender must analyze all credit factors to determine that the credit factors and guaranteed loan terms and conditions ensure guaranteed loan repayment. Credit factors to be analyzed include but are not limited to character, capacity, capital, collateral, and conditions.
- How do we get started? :- Applications are accepted from lenders through USDA local offices year-round. Interested borrowers should inquire about the program with their lender. Lenders interested in participating in this program should contact the USDA Rural Development Business Programs Director in the state where the project is located.
Who can answer my questions?
Contact the local Rural Development office that serves your area.
What law governs this program?
Code of Federal Regulations, 7 CFR 5001. This program is authorized by the Consolidated Farm and Rural Development Act, 7 U.S.C. 1932.
Why does USDA Rural Development do this?
This program improves the economic health of rural communities by increasing access to business capital through loan guarantees. This enables commercial lenders to provide affordable financing for rural businesses.
NOTE: Because information on this page may change, please always consult the program instructions listed in the section above titled “What law governs this program?” You may also contact your local office for assistance.
(1) Agricultural production is eligible only if the project is vertically integrated, ineligible for USDA Farm Service Agency (FSA) farm loan programs assistance, and it is part of an integrated business also involved in the processing of agricultural products. Commercial nurseries, forestry, and aquaculture operations are eligible without these restrictions. (2) The annual renewal fee is currently one-half of one percent (0.5%) of the outstanding principal loan balance as of December 31. The renewal fee rate is set annually by Rural Development in a notice published in the Federal Register. The rate, in effect at the time the loan is made, will remain in effect for the life of the loan. Annual renewal fees are paid by the lender and due on January 31. Payments not received by April 1 are considered delinquent and, at the Agency’s discretion, may result in cancellation of the guarantee to the lender.
Holders’ rights will continue in effect as specified in the loan note guarantee and assignment guarantee agreement. Any delinquent annual renewal fees will bear interest at the note rate and will be deducted from any loss payment due the lender. For loans where the loan note guarantee is issued between October 1 and December 31, the first annual renewal fee payment will be due January 31 of the second year following the date the loan note guarantee was issued.
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Business & Industry Loan Guarantees Program in California Download PDF
- Visit the USDA Rural Development website: https://www.rd.usda.gov/
- In the website's search bar, enter relevant keywords like "Business & Industry Loan Guarantees" or "California B&I Loan Guarantees Program."
- Browse the search results for the specific program information or documents related to the "Business & Industry Loan Guarantees" program in California.
- Once you find the desired document, it should have a link to download the PDF file. Click on the link to access and download the PDF.
If you have trouble finding the PDF document on the USDA website, you may also contact the USDA California State Office for assistance. They should be able to provide you with the necessary information or direct you to the correct resource for downloading the PDF document.
Please note that website content and document availability may change over time, so it's a good idea to verify the information on the official USDA website or contact their office for the most up-to-date resources.
Business & Industry Loan Guarantees in California Contect number
- State Office:
- Main Phone Number: (530) 792-5800
- USDA Rural Development
- Attn: Business & Cooperative Programs 430 G St, Agency 4169 Davis, CA 95616
- Dan Johnson, California Business & Cooperative Programs Director (661) 281-2736
- Dibakar Barua, BCP Specialist (530) 792-5821
- Valerie St. James, BCP Specialist (530) 792-5829
- Lyanne Mendoza, BCP Specialist (661) 281-2737
- Matt Koch, BCP Specialist (760) 347-3675 ext. 115
Business & Industry Loan Guarantees in California Apply Online FQAs
Q1: Who is eligible to apply for the Business & Industry Loan Guarantees program in California?
Ans: Eligible borrowers include for-profit and non-profit businesses, cooperatives, federally-recognized Tribes, public bodies, and individuals engaged or proposing to engage in a business in rural areas of California.
Q2: What are the key purposes for which guaranteed loan funds can be used?
Ans: Guaranteed loan funds can be used for various purposes, including business conversion, expansion, repair, modernization, land and building acquisition, machinery and equipment purchases, debt refinancing, and business and industrial acquisitions, as long as they meet program guidelines.
Q3: How can I apply for this program online?
Ans: You can apply for the Business & Industry Loan Guarantees program in California through USDA local offices or participating lenders. Online application processes may vary by lender or local office, so it's advisable to contact them directly for application instructions.
Q4: What are the interest rates for guaranteed loans?
Ans: Interest rates are negotiated between the lender and borrower, subject to Agency review. Rates may be fixed or variable, and variable rates may not be adjusted more often than quarterly.
Q5: Are there any fees associated with this program?
Ans: Yes, there are fees, including an initial guarantee fee (currently 3 percent of the guaranteed amount) and an annual guarantee retention fee (currently 0.5 percent of the outstanding principal balance). Loan origination fees are negotiated between the borrower and lender.
Q6: Where can I find more detailed program information, including application forms?
Ans: You can find detailed program information, application forms, and guidance on the official USDA Rural Development website or by contacting the USDA Rural Development Business Programs Director in California.