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Rural Cooperative Stock Purchase Program 

Description:

This program works in conjunction with the Guaranteed B&I loan program as it allows loans to be made to producers of agricultural 
products seeking to join new cooperatives that produce value-added goods. 

Loan Purposes:

Family farmers can use the B&I loan program to help pay for stock in a start-up cooperative that will process an agricultural 
commodity into a value-added product. 

Loan Terms

The maximum guarantee is 80%.
The maximum loan amount is $400,000.
Loans have a maximum term of 7 years.
The interest rate is negotiated between the producer and the lender.
The guarantee fee is 2% of the guaranteed portion of the loan.
There is no test for availability of credit from commercial creditors.
Personal and corporate guarantees are normally required.
A 10% tangible balance sheet equity is required.

Security Requirements

The stock acquired with loan funds and the personal guarantee of the producer will ordinarily be taken, but the lender will determine 
the sufficiency of collateral in accordance with it's normal lending practices.

Other Criteria:

The co-op must be a new cooperative venture, not an expansion or diversification of an existing co-op. The producer must be a 
family-sized farmer, as defined by the Farm Service Agency. 

FY 2003 Allocation

Funding for FY 2003 is being considered at this time and should be available soon. 

Timeframes for Turnaround

Loans are to be approved within 60 days of receipt of a completed application, subject to the availability. 

Where Do You Apply?

Individuals may contact their local Rural Development Area Office. 

Last Updated : January 26, 2004