The U.S. Department of Agriculture (USDA) Rural Development today unveiled new rules to expand access to capital for rural businesses. The changes, published in today’s Federal Register, make it easier for rural businesses to qualify for loans under USDA’s Business & Industry (B&I) Guaranteed Loan Program. This new regulation will go into effect August 2, 2016.
These changes allow businesses to use the New Markets Tax Credit as a form of equity. For the first time, employees of a business are also allowed 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 healthcare 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; and
- 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 in total revenue in 2014.
For a complete overview of the new rules, see page 35984 of the June 3, 2016, Federal Register.
In Oregon, USDA awarded 130 B&I Program loan guarantees totaling $287.8 million between 2009 and 2015 to help rural businesses create or retain jobs. By providing access to capital and opening up new markets, USDA is helping American businesses compete and succeed locally, nationwide, and in the tough arena of international trade. For more information, visit Chapter 6 of https://medium.com/usda-results.
Since 2009, USDA Rural Development (#USDARD) has invested $11 billion to start or expand 103,000 rural businesses; helped 1.1 million rural residents buy homes; funded nearly 7,000 community facilities, such as schools, public safety, and healthcare facilities; financed 185,000 miles of electric transmission and distribution lines; and helped bring high-speed Internet access to nearly 6 million rural residents and businesses. To learn more, visit www.usda.gov/results.