USDA RURAL DEVELOPMENT

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1 Leroy J. Debes of U.S. Department of Agriculture - Rural Development Business and Economic Development Loans -- Loan Guarantees -- Grants LeRoy J. Debes, Area Specialist Ext. 115 [email protected] Committed to the future of rural America Rural Development is an Equal Opportunity Lender, Provider, and Emplo WINERY & WINE DISTRIBUTION LAW A August t5 5, 2008 USDA RURAL DEVELOPMENT Speaker 26b: 1

2 Sharon Exley

3 Leroy J. Debes of U.S. Department of Agriculture - Rural Development Business & Industry (B&I) Loan Guarantee Govt Guarantee Loan Sizes 80% up to $5,000,000 70% $ 5 mil. Ù $10 mil. 60% $10 mil. Ù $25 mil. Other credit factors Improve Loan Structure Rural Community < 50,000 population Speaker 26b: 3

4 Rates & Terms Interest Rates: variable or fixed Maximum Terms < useful life of collateral: o Real estate.. < 30 years o Machinery & Equipment < 15 years o Working Capital.. < 7 years

5 B&I Guarantee Fees Initial Fee 2% $4 mil. x80%x2%= $48,000 Annual Fee 1/4 of 1% $3.5 mil. x 80% x.0025% = $7,000 No SBA 7(a) examination, review, oversight fees Land & Buildings Eligible Purposes Equipment & Machinery Expansion, Repairs, Modernization Acquire Existing Business Leasehold Improvements Inventory Development to Lease Term Working Capital Take-out of Interim Financing Refinance Existing Debt (limited)

6 Owner Contributions EQUITY: 20%+ New Business Start Up 10%+ Existing Business Balance Sheet Pro Forma TANGIBLE EQUITY GAAP Financial Statements Collateral l & Personal Guarantors BUSINESS PLAN (Feasibility Study?) _ Experience _Management _Repay History _ Environmental Compatible Project Intermediary Relending Program Rural Revolving Loan Funds Test of Credit Reasonable Chance to Succeed Collateral Rural < 25,000 population Loan Size < $250,000 Contact

7 Leroy J. Debes of U.S. Department of Agriculture - Rural Development Rural Business Enterprise Grant Rural Economic Development Assist Small and Emerging Private Business <$1M annual revenue Eligible Applicants: _Public Public Entities _Non-Profits Non Profits _Tribes Tribes Administration by Grantee No Grant $ To Private Businesses Rural Business Enterprise Grant?? Analysis?? Problem Solving Speaker 26b: 7

8 Rural Energy for America Program = REAP RENEWABLE ENERGY SYSTEMS: Biomass Bioenergy & Biofuels Anaerobic Digester Geothermal Hydrogen Solar Wind ENERGY EFFICIENCY IMPROVEMENTS Eligible Costs: Post-Application Costs Professional Fees Feasibility Studies??

9 Energy Loan Guarantee & Grant Eligible Applicants: 1. Agricultural Producers 50%+ gross income farm operations 2. Rural Small Businesses SBA size: Wineries 500 employees Wine wholesalers 100 employees Retail $6.5 million sales Equity Required in Energy MINIMUM Owner EQUITY: 25% cash in project for LOANS > $600,000 15% cash LOANS < $600,000 All 75% for GRANTS CASH EQUITY: Cash Federal & other grants from other sources Loans & funds from other sources Real Property Market Value collateral for loan

10 Energy Competitive Solicitation: Maximum/Project GRANT LOAN GUARANTEE renewable system $500, $ 10 mil. efficiency improvements $250,000 $ 10 mil. Not to exceed: 25% 50% Combined Grant + Loan 50%... FUNDING 2009 est. $30 mil. $400 mil. Applications deadline Ag Value-Added Producer Grants FARM BILL 2000; ; 2009 Farmer Producers Retain Ownership Process & add value to agri commodities increase profits Emerging Markets Yr est. $40 mil. Compete Nationally USE OF FUNDS: (a) Planning (Feasibility, Business, Marketing) or (b) Working Capital ( ) Not for equipment or buildings

11 Value Added Producer Grant Eligible Applicants: Independent Producers (corp., partners...) Cooperatives Associations Majority-Controlled Producer Groups Maximum Grants: 50% of eligible project costs Awards Amounts / Project: Planning $2,500 Work Capital $500,000 Business and Economic Development Loans -- Loan Guarantees Grants LeRoy J. Debes Area Specialist Ext. # 115 [email protected]

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