INSIDE RURAL DEVELOPMENT
Guaranteeing the future of
rural communities
By Jack Gleason,Administrator
Business and Cooperative Programs
USDA Rural Development
uaranteeing can be a little
dangerous. Sometimes it
works out, like Joe
Namath in Super Bowl
III, but, unfortunately,
many other times it doesn’t. USDA
Rural Development has a number of
loan guarantee programs that are
almost as successful as Broadway Joe’s
famous Super Bowl pledge.
Loan guarantees provide lenders, like
banks and credit unions, a guarantee
that they will receive a certain percentage
of principal lost on a failed loan.
This guarantee can be the security a
bank needs to fund an application from
a rural business or co-op. The vast
majority of these projects are successful
and USDA rarely has to pay out the
guarantee. But, without the guarantee,
many rural development projects would
not have access to the resources they
need to move forward.
Loan guarantees are very successful
and a large part of the $63 billion that
USDA Rural Development has invested
in the rural economy since 2001.
One of the newer loan guarantee
programs available through Rural
Development is the Renewable Energy
and Energy Efficiency loan program.
These loans are designed to encourage
agricultural producers and small rural
businesses to create renewable and
energy efficient systems.
Clinton County Bio Energy LLC,
located in Eastern Iowa near
the Mississippi River, is an
example of one rural business
that has benefited from this
loan guarantee program. It
received a $3.22 million loan
guarantee to partially fund
construction and operation of
a biodiesel plant with a yearly
capacity of 10 million gallons.
The Clinton County
biodiesel facility is still under
construction and is expected
to be up and running by this
May. When completed, the
plant will use more than 7
million bushels of soybeans
each year and provide the Clinton area
with at least nine new jobs.
Clinton County Bio Energy is made up
of a relatively small group of investors,
so the opportunity provided by the
USDA loan guarantee was critical,
according to Daniel Holesinger, the
facility’s project manager. Because
USDA is sharing the risk, the bank is
willing to offer a loan.
Clinton County Bio Energy also
received a $500,000 grant last year
through the Renewable Energy and
Energy Efficiency program. USDA
Secretary Mike Johanns recently
announced that $176.5 million in loan
guarantees and almost $11.4 million in
grants is available through this program
to help agricultural producers and rural
small businesses purchase renewable
energy systems and make energy efficiency
improvements.
In addition to biodiesel facilities like
Clinton County Bio Energy, eligible
projects include installing wind turbines,
high-efficiency grain dryers, or
making energy efficiency changes, like
improving insulation or installing automatic
lights.
The deadline to apply for grants
through this program is May 12, 2006,
but guaranteed loans will be awarded on
a continuous basis.
USDA Rural Development is a venture
capital source for rural America
and has $17 billion to invest in the rural
economy this year. So, if you are interested
in learning more about the Renewable
Energy and Energy Efficiency
program or our other guaranteed loan
programs let us know. You can learn
more on our website:
www.rurdev.usda.gov. Or, you can call
us at (202) 720-4323 to be connected to
the USDA Rural Development office in
your state.
We look forward to working with
you to guarantee a successful future for
rural America.
