Bloomington, Illinois - USDA Rural Business-Cooperative Service Administrator Sam Rikkers yesterday unveiled new rules to expand access to capital for rural businesses.
"Access to capital is one of the most important needs for businesses," Rikkers said. "USDA is partnering with the Treasury Department and other agencies to ensure that rural businesses have the resources they need to prosper and grow. The regulatory changes I am announcing today will help businesses expand their operations and create jobs."
The changes, published in today's Federal Register, make it easier for rural businesses to qualify for loans in USDA's Business & Industry (B&I) Guaranteed Loan Program.
They allow businesses to use the New Markets Tax Credit as a form of equity, and allow, for the first time, employees of a business to qualify for loan guarantees to purchase stock in a business by forming an Employee Stock Ownership Plan or worker cooperative.
Other improvements include:
- New, loan application scoring criteria, including priority for loans to businesses that will create quality jobs, such as those with health care benefits;
- Reduced paperwork requirements to refinance loans;
- Strengthened eligibility criteria for non-regulated lenders (such as privately owned finance companies) to participate in the B&I program;
- Expanded loan eligibility, including in urban areas, for projects that process, distribute, aggregate, store and/or market locally or regionally produced foods.
The stock ownership provisions are modeled after rural cooperative businesses. Co-ops have been economic development partners with USDA for decades. A January 2016 USDA report indicated that cooperatives earned $6.5 billion in net income and generated $246.7 billion in total revenue in 2014.
For a complete overview of the new rules, see page 35984 of the June 3, 2016 Federal Register.
USDA awarded more than 3,500 Business & Industry program loans totaling $9.7 billion between 2009 and 2015 to help rural businesses create or retain jobs. One of these loans – for $1.8 million in 2013 – helped White Rock Specialties, LLC buy equipment and convert an old school in Mosca, Colo., into a potato packing facility. White Rock has a large supply of potato growers in the San Luis Valley and focuses on locally grown organic specialty potatoes.
Another B&I loan from 2013 helped DeVilbiss Healthcare, LLC relocate its manufacturing facility from China to Somerset, Pa., preserving 92 jobs and creating an estimated 20 new full-time, living-wage jobs. By providing access to capital and opening up new markets, USDA is helping American businesses compete and win in the tough arena of international trade. For more information, visit Chapter 6 of https://medium.com/usda-results.
The expanded loan eligibility for projects that process, distribute, aggregate, store and/or market locally or regionally produced foods is part of USDA's broader effort to support strong local and regional food systems that connect rural and urban communities.
USDA's Know Your Farmer, Know Your Food Initiative coordinates the Department's work to help farmers, ranchers and businesses access the growing market for local and regional foods, which was valued at $12 billion in 2014 according to industry estimates. Under this Administration, USDA has invested $1 billion in more than 40,000 local and regional food businesses and infrastructure projects.
Since 2009, USDA Rural Development (#USDARD) has invested $11 billion to start or expand 103,000 rural businesses; helped 1.1 million rural residents buy homes; funded nearly 7,000 community facilities such as schools, public safety and health care facilities; financed 185,000 miles of electric transmission and distribution lines; and helped bring high-speed Internet access to nearly 6 million rural residents and businesses. For more information, visit www.usda.gov/results.