U.S. Department of Agriculture-Rural Development Alaska State Director (USDA-RD) Jim Nordlund today presented USDA’s new rules to expand access to capital for rural businesses.
"Access to capital is one of the most essential needs for many businesses," Nordlund said. "USDA is partnering with the U.S. Treasury Department and other agencies to ensure that rural businesses have the resources they need to flourish and expand. The regulatory changes announced today will help businesses expand their operations and create jobs."
The changes, published in the June 3rd Federal Register, make it easier for rural businesses to qualify for loans in USDA-RD’s Business & Industry (B&I) Guaranteed Loan Program..
They allow businesses to use New Markets Tax Credit as a form of equity, and allow, for the first time, employees of a business to qualify for loan guarantees to purchase stock in a business by forming an Employee Stock Ownership Plan or worker cooperative.
Other improvements include:
- New, loan application scoring criteria, including priority for loans to businesses that will create quality jobs, such as those with health care benefits;
- Reduced paperwork requirements to refinance loans;
- Strengthened eligibility criteria for non-regulated lenders (such as privately owned finance companies) to participate in the B&I program;
- Expanded loan eligibility, including in urban areas, for projects that process, distribute, aggregate, store and/or market locally or regionally produced foods.
The stock ownership provisions are modeled after rural cooperative businesses. Co-ops have been economic development partners with USDA for decades. A January 2016 USDA report indicated that cooperatives earned $6.5 billion in net income and generated $246.7 billion nationwide in total revenue in 2014.
For a complete overview of the new rules, see page 35984 of the June 3, 2016 Federal Register.
As an example, between 2009 and 2015, USDA-RD Alaska awarded 60 B&I loans totaling $99,952,843 to help rural businesses create or retain jobs. One of these loan recipients, Bering Air Inc., has received $15,450,000 in funding through Rural Development’s Business and Industry Guaranteed Loan Program.
For more information on our B&I Guaranteed Loan Program, please contact Renee Johnson, Director, Business Programs at: (907) 761-7712 or renee.johnson@ak.usda.gov or Terri Kingsley, Loan Specialist at: (907) 761-7726 or terri.kingsley@ak.usda.gov.