Bi Loan Guarantee Public

  • 228 views
Uploaded on

 

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
228
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
4
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. BUSINESS AND INDUSTRY GUARANTEED LOAN PROGRAM USDA Rural Business-Cooperative Service
  • 2. THE B&I PROGRAM
    • Improve, develop, or finance business, industry, and employment, and improve the economic and environmental climate in rural communities.
    • Bolster the existing private credit structure through the guarantee of quality loans that will provide lasting community benefits.
  • 3. ELIGIBLE LENDERS
    • Any Federal or State chartered and regulated lender. Including:
    • Commercial Banks
    • Savings and Loan
    • Credit Unions
    • Farm Credit
  • 4. LOAN GUARANTEE LIMITS
    • $0 - $5 Million 80% Guarantee
    • $5 Million - $10 Million 70% Guarantee
    • $10 Million - $25 Million 60% Guarantee
  • 5. COST OF THE PROGRAM
    • Guarantee Fee –
    • 2% of the Guaranteed Portion of the original Loan Amount.
    • Due at Loan Closing.
    • Lender’s Annual Renewal Fee –
    • ¼% of the Guaranteed Portion of the remaining balance.
    • Due every January 31 st .
  • 6. BORROWER ELIGIBILITY
    • Any Corporation, Partnership, Sole Proprietor, Co-op, LLC, Indian Tribe, Public Body engaged in a business.
    • Organized either on a for profit or nonprofit basis.
    • In a rural area - not within the boundaries of a city of 50,000 or more, or located in adjacent urbanized areas.
    • 51 percent owned by U.S. Citizens or persons admitted for permanent residence.
  • 7. INELIGIBLE BORROWERS
    • Charitable institutions.
    • Churches or church-controlled organizations.
    • Fraternal organizations.
    • Lending and investment institutions.
    • Insurance companies.
    • Businesses engaged in illegal activity.
  • 8. INELIGIBLE BORROWERS
    • Golf Courses and Race Tracks.
    • Owner-occupied housing.
    • Businesses with Government employees or military personnel as directors, officers, or owners (20 percent or more control).
    • Businesses with more than 10 percent of gross revenue from gambling.
  • 9. ELIGIBLE LOAN PURPOSES
    • Acquire Land and Buildings used for business.
    • New construction and improvements.
    • Machinery and equipment purchases.
    • Inventory or working capital.
    • Favorable debt refinancing or
    • business acquisitions.
    • Start a new business.
  • 10. INELIGIBLE LOAN PURPOSES
    • Lines of credit.
    • Lease payments.
    • Payment of delinquent obligations.
    • Distribution or payment to an owner, beneficiary, or a close relative.
  • 11. INELIGIBLE LOAN PURPOSES
    • Relocation of jobs outside their existing community.
    • Agriculture production that is not integrated with processing - other exceptions.
    • Loans with direct or indirect conflicts of interest.
    • Collateralize other obligations.
  • 12. LOAN TERMS
    • Maximum repayment terms for:
      • Real estate - 30 years.
      • Machinery and equipment - the lesser of 15 years or its useful life.
      • Working capital - 7 years.
    • No balloon payments allowed .
  • 13. COLLATERAL
    • Sound and sufficient to protect interests of the Lender and Agency.
    • Appropriately discounted to reflect
    • recovery values.
    • Junior liens can be considered.
    • Must have same collateral for the guaranteed and non-guaranteed portions.
  • 14. EQUITY BASED ON GAAP
    • Tangible Balance Sheet Equity –
    • Minimum of 10 percent for existing businesses.
    • Minimum of 20 percent for new businesses.
    • Will require more for riskier or specialized businesses.
    • Intangibles – such as goodwill, organizational costs, loan fees, patents, trademarks, and R&D are not included.
  • 15. CREDIT ANALYSIS
    • Lender analysis -
    • Address borrower’s management ability, repayment ability, credit history, location, competition, personal guarantees, collateral and other important aspects.
    • Financial Statements - past 3 years historic and 2 years of projections supported by a feasible
    • business plan.
    • Compile ratios and compare to industry standards.
  • 16. ISSUING THE GUARANTEE
    • Lender certification -
    • No material adverse changes in borrower’s condition.
    • All conditions of the Commitment have been met - equity, insurance, personal guarantees, liens perfected, etc.
    • Loan has been properly closed.
    • Settlement Statement .