USDA AND BANK OF AMERICA TEAM UP TO HELP RURAL AMERICA
WASHINGTON, Jan. 21, 1998 -- Agriculture Secretary Dan Glickman today announced that Bank of America was named USDA's first certified nationwide lender under its Business & Industry (B&I) Guarantee Loan Program. The B&I program helps create jobs and stimulates rural economies by financing new and existing rural businesses.
"Along with their certification, Bank of America committed to providing $500 million to rural America over the next three-and-a-half years," Glickman said. "We at USDA are proud to be a partner in this extraordinary economic development venture."
The B&I program provides loan guarantees that can be used for working capital, machinery and equipment, buildings and real estate, and debt refinancing. Prospective borrowers seek loans from local lenders, such as Bank of America, which in turn receive guarantees from USDA. Rural America benefits from the expansion of lending capabilities of private lenders. Lenders have their credit limits extended and reduce their risk exposure by participating in USDA's program. As a certified lender, banks benefit from streamlined regulations and application process.
"Financing small businesses is one of the most important things the government can do to help a community," said Jill Long Thompson, under secretary for Rural Development. "Last year we financed the start-up or expansion of 659 rural businesses or cooperatives, created or preserved more than 29,400 jobs in the process, and guaranteed over $815 million in loans in rural America."
Since 1985, program losses have been about 4 percent of the amount loaned. On an average for FY 1997, a new job is created for every $253 USDA spends on the B&I program.
Maximum loan guarantees are: 80 percent for loans of $5 million or less; 70 percent for loans between $5 million and $10 million, and 60 percent for loans exceeding $10 million. The maximum loan amount is $25 million.
Contacts:
Clark Ray, (202) 720-5579
Dan Campbell, (202) 720-6483