Intermediary Relending Program 

Eligible Applicants - Organizations eligible to become intermediaries include Not-For-Profit Corporations, Public Agencies, Indian Tribal Groups and Cooperatives. The applicant must be at least 51% owned or controlled by U.S. citizens or permanent residents. A successful history of having operated a revolving loan fund and a staff with experience and expertise in making and collecting loans are very desirable.

Type of Assistance - The intermediary receives a loan which is repayable over 30 years at 1% interest. Principal payments are usually deferred for the first two years to give the intermediary time to put the funds to work.

Use of Funds - The only authorized purpose for use of loan funds is to relend them to rural businesses or community development projects. An eligible rural area for this program is defined as including all territory which is outside of a city having a population of 25,000 or more. Most types of businesses can be financed except for farms, golf courses, race tracks, gambling, charitable institutions, lending, investment or insurance companies, community antenna television or illegal business activities.

Amount of Loans - The maximum initial loan is now $2,000,000. Applicants should restrict their request to an amount that can be relent within 12 months. Subsequent applications for up to $1,000,000 annually can be filed by intermediaries who are successful in relending all of the initial loan amount.

Relending of Funds - Intermediaries determine the interest rate and terms of the loans they make. They also process applications, determine credit standards and approve loans. The maximum loan they can make to any one business is $250,000 (the majority of loans are expected to be $150,000 or less) and IRP funds cannot finance more than 75% of project costs. All first round loans must be reviewed by Rural Development before they are approved. Rural Development will review the loans to determine that program regulations are being followed and will complete environment assessments as necessary.

Collateral - Rural Development will secure its loan to the intermediary with an assignment of the loans and collateral which the intermediary receives from ultimate recipient businesses. The Government will not take actual assignments of the ultimate recipient loans as long as the intermediary’s loan with the Government is in good standing. The intermediary will collect and service its loans.

Other - The interest and fee income which the intermediary receives can be used to pay administrative expenses to the extent that it is not needed to repay the IRP loan. Reporting requirements include an annual audited financial statement, semi-annual reports of program status and an annual budget.

Applications and Availability of Funds - The IRP program is authorized nationwide to make approximately $38 million in new loans each year. Applications are filed with the local USDA Rural Development office and compete nationally for the available funds. In recent years the demand has exceeded the available funds. Applications are selected for funding quarterly on the basis of a priority score determined according to factors published in the program regulations. For application forms and information about the program contact the Rural Development Specialist covering the county where the business will be located.  Application forms can also be obtained at any Rural Development office or on line through the USDA eForms website.