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| Eligibility |
Population Limit |
Test For Credit |
Eligible Loan Purposes |
Ineligible Loan Purposes |
| Loan Terms |
Interest Rates |
Security |
Feasibility
Requirements |
Preapplication/
Application |
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| ELIGIBILITY: |
- Nonprofit corporations
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Public bodies
- Federally recognized Indian tribes
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POPULATION
LIMIT: |
Loans will not be made in a city or town with a population in excess of 20,000 population. Priority will be given to communities of less than 5,000 population. |
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TEST FOR CREDIT:
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Applicant must certify, and USDA Rural Development must concur, that it is unable to finance the proposed project from their own resources or through commercial credit at reasonable rates and terms. |
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ELIGIBLE
LOAN PURPOSES: |
- Construct, enlarge, extend or otherwise improve essential community facilities primarily providing fire or rescue services primarily to rural residents and rural businesses. Rural business would include facilities such as educational and other publicly owned facilities. "Otherwise improve" includes, but is not limited to, the following:
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Purchase of major equipment, such as fire trucks and ambulances, which will, in themselves, provide an essential service to rural residents
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Purchase of existing facilities when it is necessary either to improve or to prevent a loss of service
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Pay the following expenses when they are necessary:
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Reasonable fees and costs (such as legal)
- Interest
- Costs of acquiring interest in land and rights
- Purchasing or renting equipment
- Initial operating expenses
- Refinancing debts when all of the following exist:
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Debts being refinanced are secondary part of loan
- Debts being refinanced were incurred for facility or service being currently financed
- Arrangements cannot be made with present creditors to extend or modify terms of the existing debts
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INELIGIBLE
LOAN PURPOSES: |
- Facilities which are not modest in size, design and cost
- Loan finder's fees
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| LOAN TERMS: |
- Loan will not exceed the useful life of the facility or the equipment being financed
- Loan will not exceed 40 years for not-for-profit corporations
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| INTEREST RATES: |
There are three interest rate levels: poverty, intermediate and market. The type of rate applicable to a project is dependent on the Median Household Income of the service area.
- The poverty rate is appropriate if the median household income of the service area is below the poverty* line or is below 80% of the state nonmetropolitan
median household income ($31,234 and the loan is to upgrade existing facilities or construct new facilities required to meet applicable health or sanitary standards
- The intermediate rate applies to loans that do not meet the requirements for the poverty line rate or for which the median household income in the service area is below the poverty line or not more than 100% of the nonmetropolitan
median household income of the state ($39,043)
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The market rate applies to all loans that do not qualify for the poverty or intermediate rates
Currently, the poverty rate is 4.5%. The market rate is adjusted quarterly based on a bond buyer index. The intermediate rate is midway between the poverty and market rates.
NOTE: For essential community facility loans, the current interest rate will be increased by two percent if the project being financed will involve the use of, or construction on, prime or unique farmland.
*The poverty line amount is updated annually. As of April, 2007, the poverty line is $20,650. |
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| SECURITY: |
Loans will be secured by the best security position practicable to protect the interest of the Government during the repayment of the loan.
In Missouri, loans are normally made to nonprofit corporations which are secured by a note and real estate deed of trust (if applicable). Assignments are usually taken on accounts, contract rights, general intangibles, equipment and fixtures. A pledge of revenue and a lien on all equipment purchased is required. |
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FEASIBILITY
REQUIREMENTS: |
All projects financed must be based on a satisfactory source of revenue sufficient to provide for operation and maintenance, reserve and debt payment. The applicant is expected to provide a financial feasibility report: 1) using Form RD 1942-54, Applicant's Feasibility Report, or 2) as part of the preliminary engineering/architectural report using Guide 6 of RD Instruction 1942-A. |
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PREAPPLICATION/
APPLICATION: |
No Preapplication is required.
Application will consist of:- Application, SF-424.1 (Non-Construction) or SF-424.2 (Construction)
- Form RD 1940-20, Request for Environmental Information (Not required for equipment)
- Questionnaire to Determine Need for Cultural Resource Survey (Not required for equipment)
- Organizational Documentation
- Certification of Incorporation
- Articles of Incorporation with amendments
- Bylaws with amendments
- Certificate of Good Standing
- Form RD 1942-54, Applicant's Feasibility Report (Stress Item 8 of the form, five years' past audits, financial statements, or lists of income and expenses for the past five years)
- Map of Service Area and User List
- List of Townships Served
- Form RD 1942-52, Cash Flow Projection
- Applicant's Letter on Other Credit
- Preliminary Architectural Report (If building is involved and is not pre-engineered)
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