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Timber Production Expansion Guaranteed Loan Program (FAQs)

This page contains answers to common questions for the Timber Production Expansion Guaranteed Loan Program (TPEP). The questions and answers are organized by topic of interest for both lenders and borrowers and are updated on a regular basis. To view answers, click the plus sign (+) next to your question of interest. If you cannot find an answer to your question, you may submit a question or comment for consideration by using the Submit a Question button.

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For Lenders

  • The lender will conduct a credit evaluation using credit documentation procedures and underwriting processes consistent with generally-accepted, prudent lending practices, and 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 the borrower's financial capacity and guaranteed loan terms and conditions to ensure guaranteed loan repayment.

    Examples of credit factors to be analyzed include character, capacity, capital, collateral, and conditions.

  • No guarantee or annual fees apply.

    Other reasonable and customary fees for loan origination are negotiated between the borrower and lender.

  • With Rural Development’s concurrence, the lender establishes and justifies 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 total amount of guaranteed loans to one borrower under this notice (including the guaranteed and unguaranteed portions, and for subsequent loans, the outstanding principal and interest balance of any existing TPEP guaranteed loans, plus the new loan request) must not exceed $25 million. 

    The loan guarantee is 90 percent for all TPEP loans.

  • Interest rates are negotiated between the lender and the borrower. Rates can be fixed or variable. Variable interest rates must be tied to a base rate published in a national or regional financial publication, agreed to by the lender and Rural Development. 

    Different interest rates on the guaranteed and unguaranteed portions are permissible. 

  • Collateral must have documented value sufficient to protect the interest of the lender and Rural Development. 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). 

  • Borrowers must be:

    A business seeking to establish, reopen, retrofit, expand, or improve a sawmill or other wood processing facility processing ecosystem restoration byproducts from an identified unit of United States Forest Service (USFS) National Forest System lands. 

  • Lenders must service their loans in accordance with OneRD regulations.  

 

For Borrowers

 

  • Under the Timber Production Expansion Guaranteed Loan Program (TPEP), USDA Rural Development works directly with approved lenders to back (guarantee) their loans to qualifying sawmills and timber processing facilities. As a potential borrower, you work directly with your lender, who then applies for the program on your behalf. If you’re interested in financing available through the TPEP program, you can start by asking your lender if they plan to participate. 

  • Lenders that receive a federal loan guarantee are able to offer more competitive interest rates and terms. In addition, these loans can be sold on the secondary market, providing additional revenue. The guaranteed loan amount does not count against the bank’s legal lending limit, allowing smaller banks to do larger projects. From a borrower’s perspective, closing and making payments on a guaranteed loan is unlikely to feel different from any other loan. However, it’s always best to work with your lender to determine whether a USDA guaranteed loan best fits your financing needs.  

  • We want to ensure all interested lenders know how to participate. USDA Rural Development offers ample resources on the OneRD Guarantee Loan Initiative website. Additionally, lender training targeted to nonregulated community development financial institutions (CDFIs) and other mission-driven lenders well-positioned to lend in this sector is available on YouTube. If you know a lender interested in participating, encourage them to contact us at TPEP@usda.gov.  

  • First, talk with your lender. If approved to participate, your lender will then work directly with USDA Rural Development to apply for the guarantee. 

  • Eligible lenders include federally chartered and state-chartered banks, credit unions,  CDFIs, Farm Credit institutions, and “Non-Traditional Lenders” (which must be approved through the OneRD Guarantee Loan Initiative). Lenders can also sign up on the OneRD website for email updates and news about upcoming training and other opportunities. Lenders may submit questions to OneRDGuarentee@usda.gov. 

  • Any regulated lender - Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), or Farm Credit System (FCS) - is eligible to participate in the TPEP program. This includes banks, credit unions, loan funds, and Community Development Financial Institutions (CDFIs), among others. 

    You are encouraged to start with your current lender to see if they qualify as a regulated lender. If so, they are automatically eligible. If they are interested, but are not federally regulated, they can go through the OneRD Guarantee Loan Initiative approval process. Lenders may submit questions to OneRDGuarentee@usda.gov. 

    Please contact your Rural Development state office if you need more help or information.  

  • The Forest Service determines the areas that qualify for TPEP. Rural Development is responsible for ensuring a project is eligible. As a borrower, you must work with your lender to ensure your project qualifies. Other helpful eligibility information can be found on our program fact sheet and the Federal Register Notice. 

  • If you are unable to get the answers you need from your state office, please contact us at TPEP@usda.gov