Intermediary Relending Program:
PURPOSE
The Intermediary Relending Program provides for the establishment of a revolving loan fund. Loans are made by an intermediary to finance business development in rural areas (pop. 25,000 or less). Intermediaries may be private non-profit corporations, public agencies, Indian tribes, or cooperatives with experience in lending.
ELIGIBILITY (LENDER)
Cooperatives
Public
Agencies
Private
Non-Profit Corporations
Federal
or State Recognized Indian Tribes
ELIGIBILITY (BORROWERS)
Individuals
Legal Entities
Public or Private
Organizations
FUND USE
Intermediary
Agency Intermediary Re-lending Program funds must be placed in the intermediary Intermediary Re-lending Program fund and used by the intermediary to provide direct loans to eligible ultimate recipients
Ultimate
Recipients
Loans from the intermediary to the ultimate recipient using the Intermediary Re-lending Program revolving fund must be for community development projects, the establishment of new businesses, expansion of existing businesses, creation of employment opportunities, or saving existing jobs. Such loans may include, but are not limited to:
Interest
Debt Refinancing
Feasibility studies
Transportation services
Educational Institutions
Revolving Lines of Credit
Pollution control and abatement
Start-up operating costs and working capital
Purchase of equipment, leasehold improvements, machinery, or supplies
Business and industrial acquisitions when the loan will keep the business from closing, prevent the loss of employment opportunities, or provide expanded job opportunities
Business construction, conversion, enlargement, repair, modernization, or development
Purchase and development of land, easements, rights-of-way, buildings, facilities, leases, or materials
Hotels, motels, tourist homes, bed and breakfast establishments, convention centers, and other tourist and recreational facilities.
INELIGIBLE FUND USE
Agency Intermediary Re-lending Program funds may not be used for payment of the intermediary’s administrative costs or expenses. The Intermediary Re-lending Program revolving fund may not be used for:
Assistance in excess of what is needed to accomplish the purpose of the ultimate recipient’s project.
Any illegal activity
Agricultural production
Golf courses, race tracks, or gambling facilities
Community antenna television services or facilities
Lending and investment institutions and insurance companies
Distribution or payment to the owner, partners, shareholders, or beneficiaries of the ultimate recipient or members of their families when such persons will retain any portion of their equity in the ultimate recipient
Charitable institutions that would not have revenue from sales or fees to support the operation and repay the loan, churches, organizations affiliated with or sponsored by churches, and fraternal organizations
Assistance to government employees, military personnel, or principles or employees of the intermediary or organizations for which such persons are directors or officers or in which they have ownership of 20 percent or more
A loan to an ultimate recipient which has an application pending with or a loan outstanding from another intermediary involving an Intermediary Re-lending Program revolving fund if the total Intermediary Re-lending Program loans would exceed legal limits
The
transfer of ownership unless the loan will keep the business from closing, or
prevent the loss of employment opportunities in the area, or provide expanded
job opportunities
Any project that is in violation of either federal, state, or local environmental protection law or regulation or an enforceable land use restriction unless the assistance given will result in curing or removing the violation
RATES
Loans made by the Agency to an intermediary have a fixed, annual percentage rate of 1 percent over the life of the loan
The Intermediary sets the interest rate charged to ultimate recipient
TERMS
No loan to an intermediary shall be extended for a period exceeding 30 years. Interest and principal payments will be scheduled at least annually. The initial principal payment may be deferred (during the period before the fund becomes income producing) by the Agency, but not more than 3 years
Loans made by an
intermediary to an ultimate recipient from the Intermediary Re-lending Program
revolving fund will be scheduled for repayment is established by the
intermediary
MAXIMUM AMOUNTS
Intermediary
The initial Agency Intermediary Re-lending Program loan is limited to $750,000 unless certain conditions are met that will allow a $1,000,000 initial loan
Subsequent loans will not exceed $750,000 each and not more than one loan will be approved for an intermediary in any one fiscal year
Total outstanding Intermediary Re-lending Program indebtedness of an intermediary to the Agency will not exceed $15 million at any time
Intermediaries that have received one or more Intermediary Re-lending Program loans may apply and be considered for subsequent Intermediary Re-lending Program loans
No loan to an intermediary will exceed the maximum amount the intermediary can reasonably be expected to lend to eligible ultimate recipients, in an effective and sound manner, within 1 year after loan closing
Ultimate
Recipients
Loans from intermediaries to ultimate recipients using the Intermediary Re-lending Program revolving fund must not exceed the lesser of:
25 percent of the Intermediary Re-lending Program Loan, or
75 percent of the total cost of the ultimate recipient’s project for the loan being made
Portfolio
No
more than 25 percent of the Intermediary Re-lending Program loan approved may be
used for loans to ultimate recipients that exceed $150,000. This limit does not
apply to revolved funds
COLLATERAL/SECURITY REQUIREMENTS
Intermediaries
Initial security will consist of a pledge by the intermediary of all assets now in or hereafter placed in the Intermediary Re-lending Program revolving fund including:
Cash
Investments
Notes receivable from ultimate recipients
Intermediary’s security interest in collateral pledged by ultimate recipients
Security for all loans to intermediaries must be such that repayment of the loan is reasonably assured. It is the responsibility of the intermediary to make loans to ultimate recipients in such a manner that will fully protect the interests of the intermediary and the Government. Collateral/security for such loans may include, but is not limited to:
Any realty, personality, or intangible object or idea capable of being mortgaged, pledged, or otherwise encumbered by the intermediary in favor of the Agency; and
Any realty, personality, or intangible object or idea capable of being mortgaged, pledged, or otherwise encumbered by an ultimate recipient in favor of the Agency
Ultimate
Recipients
Security for a loan from an intermediary’s Intermediary Re-lending Program revolving fund to an ultimate recipient will be within the general security policies established by the intermediary and approved by the Agency.
APPLY TODAY
Potential
intermediary lenders should apply for the Intermediary Relending Program by
contacting USDA Rural Development –