Guaranteed Loan Program:

PURPOSE

The Guaranteed Loan Program provides loan guarantees to public bodies, non-profit corporations, and Indian tribes for the development of essential community facilities for public use in rural areas and towns.

ELIGIBILITY

Public Bodies 

Non-Profit Corporations

Federally Recognized Indian Tribes

Rural communities and/or small towns/cities with populations of 20,000 or less based on the latest decennial Census of the United State

FUND USE

Land Acquisition 

Equipment Purchases

Professional (Legal & Engineering) Fees

Purchase of natural gas distribution system

Relocation of private buildings, roads, bridges, fences, or utilities

Purchase existing facilities for improvement or to prevent loss of service

Construction of transportation facilities such as: streets, roads, and bridges

Purchase of major equipment which will provide an essential service to rural community residents

Purchase and preparation of industrial park sites only land acquisition and site preparation

Construction or relocation of public buildings, roads, bridges, fences, or utilities

Paying for business start up expenses such as: reasonable fees and costs, interest, costs of acquiring interest in land and rights, purchasing or renting equipment, and initial operating expenses

Refinancing debts when all of the following exist: debts being refinanced are secondary the secondary part of a loan ( less than 50%), debts being refinanced were incurred for facility or service being currently financed, and arrangements are not made with present creditors to extend or modify terms of existing debts

Financing of supplemental and supporting structures for other rural electric or telephone systems which are not eligible for electric financing

New Construction, enlargement, or improvement of community facilities for health care, community, social or cultural services and public safety services 

Financing hydroelectric generating facilities and related connecting systems and fixtures, not eligible for traditional financing

Refinancing of existing debts (Direct or Guaranteed Loans) if the debt being refinanced is (1) a secondary part of the loan,(2) associated with the project facility, (3) and if the applicant’s creditors are unwilling to extend or modify terms in order for the new loan to be feasible.

RATES

A guarantee fee of 1% of the guaranteed portion of the loan is required to close the loan guarantee

Interest rates may be fixed or variable. A variable rate must be tied to a base rate published periodically in a recognized national or regional financial publication and specifically agreed to by the lender, borrower, and Rural Development

RESTRICTIONS

Each loan that is issued a guarantee will not exceed 90% of the total cost for an individual project or facility

Lender must retain 5% of the total loan amount of the unguaranteed portion of the loan and may not be participated  

TERMS OF REPAYMENT

Loan repayment terms may not exceed the applicant’s authority (under State law or organizational structure), the useful life of the facility, or a maximum of 40 years.

SECURITY/COLLATERAL

A mortgage may be taken out on real and personal property

Bonds or notes pledging taxes, assessments, or revenues will be accepted as security if they meet statutory requirements

APPLY TODAY

To get started building your future today, contact your Local Area Office to fill out an application packet and begin the approval process.