Rural Business-Cooperative Programs

Guaranteed Loans, Direct Loans and Grants are available through USDA Rural Development.  Funds are available in the form of guaranteed loans through a local lender, and direct loans and grants directly from the U.S. Treasury.

RURAL BUSINESS ENTERPRISE GRANTS:  Grants can be made to public bodies and private nonprofit corporations to finance and facilitate development of small and emerging private business* enterprises located in areas outside the boundary of a city of 50,000 or more and its immediately adjacent urbanized area.

RURAL BUSINESS OPPORTUNITY GRANTS:  Grants can be made to public bodies, nonprofit corporations, Indian tribes, and cooperatives.  This grant program provides technical assistance to promote sustainable economic development in rural communities with exceptional needs located in areas outside the boundary of a city of 50,000 or less in population.

BUSINESS AND INDUSTRY DIRECT LOAN PROGRAM:  Its purpose is to improve, develop or finance business and industry and improve the economic and environmental climate in rural communities, including pollution abatement and control.  An insured loan is directly made and serviced by USDA Rural Development as lender.  These loans may be made in areas outside the boundary of a city of 50,000 or more.  The area must be a target county suffering physical and economic stress.

BUSINESS AND INDUSTRY GUARANTEED LOAN PROGRAM:  Its purpose is to increase employment and improve the economic and environmental climate of rural communities by guaranteeing quality loans made by private lenders in areas outside the boundary of a city of 50,000 or more in population.  Priority is given to communities and towns of 25,000 and smaller.  The guarantee is a vehicle that allows a local lender to extend its legal lending limits by the portion of loan covered by Rural Development's guarantee.  The guarantee normally does not exceed 80%, and loans are limited to a maximum of $10 million, although the Administrator may approve up to $25 million.

BOTH GUARANTEED AND DIRECT BUSINESS AND INDUSTRY LOANS HAVE THE FOLLOWING REQUIREMENTS:

1. Final maturity will not exceed 30 years for land, buildings, and permanent fixtures, 15 years for machinery and equipment or useful life of the machinery and equipment whichever is less; and 7 years for working capital.
2. A minimum of 10% tangible balance sheet equity is required for an existing business, and 20-25% will be required for new businesses and businesses without full personal or corporate guarantees.

CONTACT:  Applications for the above programs should be made at the applicable Area Office.  The Area Office staff will be glad to discuss services available from USDA Rural Development and explain how to prepare a written application.

INTERMEDIARY RELENDING PROGRAM:  Loans are available to finance business facilities and community development projects in rural areas and towns with a population of 25,000 or less.  The loans are made to intermediaries who, in turn, re-lend the funds to ultimate recipients for business facilities or community development.

RURAL ECONOMIC DEVELOPMENT ZERO INTEREST LOANS:  Loans are available from USDA Rural Development through eligible rural electric and telephone borrowers of the Rural Utilities Service.  These loans are for the purpose of promoting rural economic development and job creation projects, including business expansions, project feasibility studies, start-up costs, business incubator projects and other reasonable expenses for the purpose of fostering rural economic development.

RURAL ECONOMIC DEVELOPMENT GRANTS:  Grants are available from USDA Rural Development through eligible rural electric and telephone borrowers of the Rural Utilities Service.  These grants may be made for the establishment and operation of a revolving loan fund program to promote rural economic development and job creation projects.

RURAL COOPERATIVE DEVELOPMENT GRANTS:  Available to nonprofit corporations and institutions of higher learning to assist with startup, expansion or operational improvement of a cooperative; processes that can be used in production or enterprises that add value to on-farm production.

CONTACT:  Applications for these programs should be filed at the Rural Development State Office.  You may contact Mary Clayton, Program Director, at (334) 279-3624 or by Mary.Clayton@al.usda.gov.

COOPERATIVE DEVELOPMENT TECHNICAL ASSISTANCE is available to help rural residents form new cooperative business and improve the operation of existing cooperatives.  You may contact Chris Harmon at (334) 279-3615 or by Chris.Harmon@al.usda.gov.

For more detailed information on the programs listed above, visit the Rural Business-Cooperative Service web site.

       Please send comments or suggestions to:  beverly.helton@al.usda.gov