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Program
The purpose of the Intermediary Relending Program (IRP) is to
finance business facilities and community development projects in
rural areas. This is achieved through loans made by Rural
Development (RD) to intermediaries. The intermediaries re-lend the funds
to ultimate recipients for business facilities or community
development. Intermediaries establish revolving loan funds, so that
collections from loans to ultimate recipients, in excess of
necessary operating expenses and debt payments, will be used for
more loans to ultimate recipients.
Who May Borrow?
Intermediaries may be private nonprofit corporations, public
agencies, Indian groups or cooperatives.
Intermediaries must:
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Be bonded;
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Have legal authority to carry out the proposed loan purposes and to
incur and repay the debt;
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Have a
successful record of assisting rural business and industry,
normally including experience in making and servicing commercial
loans; and
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Provide adequate assurance of repayment.
Any type of legal entity, including individuals and public and
private organizations, may be an ultimate recipient.
At least 51% of the owners or members of both intermediaries
and ultimate recipients must be United States citizens or admitted
for permanent residence. Both intermediaries and ultimate
recipients must be unable to obtain the proposed loan elsewhere at
reasonable rates and terms.
How May Funds Be Used?
All of the IRP loan funds received by an intermediary must be relent
to ultimate recipients. Interest income and fees may be used for
administrative costs, technical assistance to borrowers, or debt
retirement. All collections from the operation of the IRP revolving
loan fund that are not used for the above authorized expenses must
be made available for relending to eligible ultimate recipients.
Loans from intermediaries to ultimate recipients must be for the
establishment of new businesses, the expansion of existing
businesses, creation of employment opportunities, saving of existing
jobs, or community development projects.
What Are the Loan Terms?
Loans to intermediaries are scheduled for repayment over a period of
up to 30 years. The term of loans from intermediaries to ultimate
recipients is set by the intermediary.
What is the Interest Rate?
The interest rate on loans to intermediaries is 1% per
annum. The interest rate charged to ultimate recipients is set by
the intermediary.
Is Collateral Required?
Yes, all loans to intermediaries must be adequately secured.
Intermediaries are asked to provide a proposal for securing the
loan, for RD's consideration, in the application.
Intermediaries are also required to provide written security
policies for loans to ultimate recipients.
If the Ultimate Recipient Fails to Repay the Loan from the
Intermediary, What Happens to the Intermediary's Loan From RD?
When the intermediary accepts the IRP loan, it is incurring a debt,
just as if it obtained a loan from a bank. It is hoped and expected
that the collections from loans to ultimate recipients will be
sufficient to repay the Rural Development loan on schedule.
However, even if the collections from ultimate recipients are not
sufficient, the intermediary is fully responsible for repaying Rural
Development.
Intermediary Relending (IRP) Program
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