USDA Rural Development: committed to the
future of America’s rural communities




SDA Rural Development is committed to helping improve the economy and quality of life in all of rural America. It helps to build a stronger nation by promoting development of rural housing and community facilities, investing in rural businesses, promoting development of new cooperatives and improved operations of existing co-ops, and building an infrastructure of modern electrical, telecommunications, water and waste disposal services.

USDA Rural Development achieves its mission by helping rural individuals, communities and businesses obtain the financial and technical assistance needed to address their diverse and unique needs. The agency provides about $13 billion per year in direct loans, guaranteed loans and grants; it has an $86 billion loan portfolio.

To help raise homeownership rates, USDA Rural Development administers both direct and guaranteed homeownership loan programs. It also has a self-help housing program, under which low-income people can use “sweat equity” to become homeowners. Rural Development also helps to build affordable rental housing and farmworker housing in rural areas.

USDA supports loans to businesses through banks and community-managed lending pools for projects that create or preserve quality jobs and/or promote a clean rural environment. The agency’s financial resources are often leveraged with those of other public and private credit source lenders to meet business and credit needs in under-served areas. Recipients of these programs may include individuals, corporations, partnerships, cooperatives, public bodies, nonprofit corporations, Indian tribes and private companies.

USDA Rural Development operates through a network of 47 state offices and more than 800 field offices located throughout the nation. Many of these are located in USDA Service Center offices.

Because readership of this magazine is primarily cooperative-oriented, the following information focuses on Rural Development’s Cooperatives and Rural Utilities Programs.

Rural Cooperatives Program
The mission of Rural Develop-ment’s Cooperatives Program is to promote understanding and use of the cooperative form of business for marketing and distributing agricultural products. It serves cooperative members, directors, management, educational institutions, rural residents and all others with an interest in the cooperative form of business. USDA maintains a library of more than 200 cooperative publications and videos, ranging from How to Start a Cooperative and Co-ops 101, to multivolume sets on tax laws for cooperatives. More than 50,000 of these publications are distributed every year, making USDA the world’s leading distributor of co-op educational materials. Many more are distributed electronically via the Rural Development website.

Primary co-op program areas include:

Technical assistance — is provided to existing cooperatives facing specific problems or challenges. Examples of this aid can include: helping a cooperative develop a strategic marketing plan to cope with changing competitive forces; assisting a co-op in making a crucial decision whether to merge or form a joint venture; finding ways to turn raw products of cooperative into valueadded products. These matters are often life and death issues not only for a cooperative, but for the rural communities in which they operate.

USDA co-op staff can help improve a cooperative’s business structure and operating efficiency. This work often involves an analysis of operations or assessing the economic feasibility of new facilities or adding new products or services. Technical assistance is largely designed to benefit a specific cooperative business or group. However, the results often provide business strategy for all cooperatives.

Cooperative research — creates a knowledge base necessary to support cooperatives dealing with changing markets and business trends. Studies include financial, structural, managerial, policy, member governance, legal and social issues, as well as various other economic activities of cooperatives. Research is designed to have direct application to current and emerging requirements of cooperatives. Recent research studies have focused on equity redemption plans used by cooperatives, identification of new niche markets for cooperatives and opportunities and obstacles cooperatives face when exporting goods overseas.

Cooperative education — The Cooperative Marketing Act of 1926 mandates that USDA “promote the knowledge of cooperative principles and practices and cooperate in promoting such knowledge with educational and marketing agencies, cooperative associations, and others.” To meet this goal, Rural Development’s Co-ops Program provides a wide range of training and educational materials.

The agency’s bimonthly magazine, Rural Cooperatives, reports significant achievement by cooperatives and examines the key issues facing them, presents the most advanced thinking of cooperative leaders and provides highlights of agency research, technical assistance and educational activities.

Cooperative development — this assistance can range from conducting an initial feasibility study to the creation and implementation of a business plan and development of bylaws. We also provide training for cooperative directors. The overall goal is to provide a realistic view of what it will take to make a new cooperative succeed, and to help guide the leaders through the various stages of launching a cooperative.

Cooperative statistics — are collected and published to detect growth trends and changes in structure and operations of cooperatives. Data help identify and support research and technical assistance activities. This information is used extensively by legislative and executive branches of government in formulating agricultural and cooperative related policy.

Some recent special co-op initiatives include:
Rural Development’s
Other Business Programs
The rural business programs help provide financing to rural business owners, nonprofit organizations, cooperatives, public bodies, and Indian tribes for business ventures which create quality jobs and stimulate the economy of rural areas. The Business and Industry (B&I) Guaranteed Loan Program creates partnerships with commercial lending institutions, the Farm Credit System and Farmer Mac to provide financing for qualified rural business enterprises, including cooperatives. This often takes the form of loan guarantees which bolster existing private credit structures in funding projects which foster lasting community benefits.

B&I loan guarantees can cover as much as 60 percent of a loan of $10 million to $25 million, or as much as 80 percent of a loan of $5 million or less. This assistance is available to businesses in areas outside the boundary of urban areas with populations under 50,000.

The Cooperative Stock Purchase Program, which operates as part of the B&I program, can help ag producers buy stock to join a new-generation or other stock-ownership cooperative, up to a maximum of $400,000. USDA will guarantee up to 80 percent of these loans for as long as seven years.

The Rural Business Enterprise Grant Program provides grants to public bodies and private, nonprofit organizations serving rural areas outside the boundary and adjacent urbanized area of a city with a population of 50,000 or more. Priority is given to applications from rural areas and towns with populations of 25,000 or less. These grants can finance small and emerging private businesses and cooperatives, or fund a revolving loan program.

For more details of these and other Rural Development Business Programs, visit: www.rurdev.usda.gov, or call (202) 720-7287.

Rural Utilities Programs
Modern utilities came to rural areas of the nation through some of the most successful government initiatives in American history, carried out through USDA working with rural cooperatives, nonprofit associations, public bodies and for-profit utilities. Today, USDA Rural Development’s Utilities Program carries on this tradition, helping rural utilities expand and keep their technology up to date, helping establish new and vital services such as distance learning and telemedicine.

The public-private partnership which is forged between USDA and these industries results in billions of dollars in rural infrastructure development and creates thousands of jobs for the American economy.

Rural Electric Program
Providing reliable, affordable electricity is essential to the economic well-being and quality of life for all of the nation’s rural residents. The electric program provides leadership and capital to upgrade, expand, maintain and replace America’s vast rural electric infrastructure. Under the authority of the Rural Electrification Act of 1936, USDA Rural Development makes direct loans and loan guarantees to electric utilities to serve customers in rural areas. USDA is the majority noteholder for more than 700 electric systems.

USDA’s Electric Program makes loans and loan guarantees to finance the construction of electric distribution, transmission and generation facilities, including system improvements and replacement required to furnish and improve electric service in rural areas, and for demand-side management, energy conservation programs, and on-grid and off-grid renewable energy systems.

Loans are made to corporations, states, territories and subdivisions and agencies, such as municipalities, people’s utility districts and cooperative, nonprofit, limited-dividend, or mutual associations that provide retail electric service needs to rural areas or supply the power needs of distribution borrowers in rural areas. USDA also provides financial assistance to rural communities with extremely high energy costs to acquire, construct, extend, upgrade and otherwise improve energy generation, transmission, or distribution facilities. USDA’s Rural Utilities Program services approximately 686 active electric borrowers in 47 states.

Rural Telecommunications Program
USDA continues to provide many programs for financing rural America’s telecommunications infrastructure. The traditional infrastructure loan program consisting of hardship, cost of money, Rural Telephone Bank and guaranteed loans provides financing of broadband and other advanced services. Since 1995, every telephone line constructed with USDA financing has been capable of providing broadband service using digital subscriber loop (DSL) technology. The Distance Learning program continues its charge to wire rural schools to tap into a rich universe of educational classes and resources; the Telemedicine program is helping to improve health care delivery in rural America by “linking” small clinics and hospitals to major medical facilities.

The Broadband Program is a loan program designed to increase the rate of deployment of broadband technology to small towns in rural areas. Under this program, Rural Development can fund borrowers serving communities of up to 20,000 inhabitants.

Contact information:
Rural Development website:
www.rurdev.usda.gov; phone numbers:
Cooperatives Program (202) 720-7558;
Rural Business Program (202) 690-4730;
Rural Utilities Program (202)720-9540;
Rural Housing and
Community Facilities Programs:
(202) 690-1533; address: (Cooperatives
Program): USDA Rural Development,
Cooperatives Program, Stop 3250,
1400 Independence Avenue, S.W.,
Washington, D.C. 20250.
E-mail: coopinfo@rurdev.usda.gov



May/June Table of Contents