USDA Rural Development

Elsie M. Meeks

State Director

April 20, 2011

USDA RD

Our Mission

To increase economic opportunity and improve the quality of life for all rural Americans

USDA - Rural Development

• Rural Business / Cooperative Programs

• Rural Housing Programs

• Rural Utilities

Business Finance 8 programs

Business and Industry Program

For starting or expanding rural businesses and cooperatives

Reduces risk to lenders and raises their lending limits

Guarantees to local lenders 80% up to $5 million 70% up to $10 million 60% up to $25 million

Business and Industry

Guaranteed Loans• Loans are Made by Eligible

Lenders• Uses of loans:

– Equipment– Construction– Working capital– Refinancing in Certain Situations

Provides Grants to:

Public Bodies (Cities) Non-Profits, Tribes All Serving Rural Areas

Rural Business Enterprise Grant

•Grants can finance small and emerging private businesses and cooperatives, provide technical assistance or fund a revolving loan program

•Commonly requests are $99,000 or less have higher priority

Rural Business Opportunity Grants (RBOG)

• Eligible applicants: tribes, nonprofits, public bodies• Purposes:

– Identify and analyze business opportunities – Provide TA to existing or prospective entrepreneurs– Conduct local or multi-county Econ. Dev. Planning– Conduct leadership training– Pay for professional services for planning or training.

• Priority scoring: Applications under $50,000

• Zero Percent Interest Loans may be made to RUS Borrowers (Electric or phone Coops)

• Supplemental Funding of at Least 20% of the Zero Percent Interest Loan is Needed

• $740,000 Maximum Loan

Rural Economic Development Loan

• Revolving Loan Fund (RLF) Established by Electric or Telephone Coop

• Funding for Community / Medical Facilities and Education Facilities

• $300,000 Maximum Per Project

Rural Economic Development Grant

Value Added Producer Grants (VAPG)• Eligible: Individuals, LLC, LLP, For-Profits, or Non-

Profits that are owned or controlled by Ag Producers

• Funding under a NOFA (Deadline) (likely due in mid July)

• Planning Grant $100,000 • Working Capital $300,000.• There is a $1 to $1 match requirement

• Must be a change in the physical state of the product

Sec. 9007: Rural Energy for America Program

Grants and Loan Guarantees for Farmers, Ranchers, Grants and Loan Guarantees for Farmers, Ranchers, and Rural Small Businessesand Rural Small Businesses

Section 9007Renewable Energy and Energy

Efficiency Improvement

• Purchase renewable energy systems

(A system that produces or produces and delivers usable energy from a renewable energy source)

• Energy Efficiency Improvements (Improvements to a facility or process that reduce energy consumption)

RE/EE Program Overview

• Section 9007 – Cost Sharing

– The amount of the grant shall not exceed 25% of the eligible cost of the activity funded.

– The combined loan and grant made or guaranteed shall not exceed 75% of the eligible cost of the activity funded.

– Only post-application costs eligible.

What Small Businesses are Eligible?

• A private entity including a sole proprietorship, partnership, corporation, & cooperative

• Citizenship

• Visit http://sba.gov/size/index.html for meeting the size definition.

– NOTE: Public or private non-profits are not eligible.

What Agricultural Producers Are Eligible?

• Must directly engage in production of agricultural products.

• At least 50% of gross income must be from agriculture production.

• Citizenship.

Solar Powered Stock Tanks in the Powder River Basin: A Renewable Energy System

for Livestock Producers

Solar Energy

Wind Energy

Geothermal – Direct Use• A system that uses thermal energy directly from a

geothermal source – At high temperatures, can directly heat water

or buildings – At lower temperatures, temperature

difference between earth and air can heat and cool buildings

Hydrogen•A renewable energy system that produces hydrogen or a renewable energy system that uses mechanical or electric power or thermal energy from a renewable resource using hydrogen as an energy transport medium.

2 projects funded in SD in FY 07

7 projects funded in SD in FY 08

28 projects funded in SD in FY09

40 projects funded in SD in FY10

Energy Efficiency ImprovementsGrain Bin Dryer Replacement

Energy Efficiency ImprovementsIrrigation Pump Replacement

South Dakota 3 projects

Example: The project replaced an old, inefficient diesel

motor with a new electric, more efficient motoron an irrigation well.

Application Deadline• Funding hasn’t been announced yet, but we’re expecting it in March. We

encourage applicants to file early.• $407 million funding in FY10 ($20 mm grants)• $60 million funding in FY09 • $35 million funding in FY08• $23 million in FY07

• Contact Rural Development office nearest you to start the application process.

• Get a firm bid on the equipment• Talk to your banker about the guaranteed loan.

Intermediary Relending Program

• Eligible applicant: non profits, Tribes, public agencies

• Purpose: start a revolving loan fund

• Rates & Terms – 1% for 30 years to the intermediaries and they relend

• Deadline to apply: quarterly

Rural Housing Program

502 Single Family Housing Program

• 502 Direct Housing Loans are at 100% financing for low & very low income families.

• Guaranteed Loans are at 100% financing for households with higher incomes.

Benefits of the SFH Program

• No down payment.

• Generous ratios of

29% PITI and 41% TD.

• Closing costs can be financed.

Guaranteed Loan Program Guidelines

• Available to families or persons whose incomes at time of initial occupancy do not exceed 115 percent of Median Household Income.

• Up to 90 percent Guarantee.

504 Single Family Housing Program• Loans or grants for

elderly single family home owners 62 years of age or old.

• Loans are at 1% interest rate for 20 years with a maximum amount of $20,000.

• Maximum grant amount is $7,500 life time.

Multi-Family Housing Program

• Rural Rental Housing Direct Loans Section 515.• MFH in communities of 20,000 population or

less.• Rental Subsidies available to low income tenants.• Housing built with 515 loans

is for families, people 62 years of age or older, and people with disabilities. Serves mostly low income families.

Multi-Family Guaranteed Loans Section 538

• Guarantee loans by conventional lenders for affordable rental housing. Aimed at low to moderate income tenants.

• Develop affordable rental housing in rural areas (20,000 and less) through use of loan guarantees combined with risk sharing partnerships of public and private lenders.

•90% guarantee

Rural Utilities Programs

Water and Environmental Program

Direct and guaranteed loans and grants to install, expand, and improve water and wastewater systems, solid waste disposal, and storm sewers.

In towns under 10,000

population.

Applicant Eligibility

• Public Body, town or county

• Not for profit organization

• Associations• Indian Tribes

Drinking Water Projects• New Rural Water

System• Rural Water

Extensions & Upgrades

• Water Storage Tanks

• Water Treatment Plants

Sanitary Sewer Projects

• New Sewer Systems• Sewer System Extensions• Wastewater Treatment

Plant Improvement

Solid Waste Disposal Projects

• Equipment• Trash trucks• Transfer stations• Landfill

Water & Environmental Programs

• Terms – up to a 40 year loan

or useful life of the security

• Rates – usually around 4.0 to 4.5%

WEP Grants…

• Grant funds are limited.

• MHI Below $33,795

– Project is necessary to alleviate a health or sanitary problem then MHI needs to be at 80% of MHI.

• Pre Development Planning Grants – max. $20,000 (not to exceed 75% of cost)

– 80% of MHI

Community Facilities ProgramDirect and guaranteed loans, and grants, to public entities, Indian tribes, and nonprofits. Improve the economic and environmental climate of rural communities.

Examples:

•Health Care – hospitals, clinics, nursing homes;

•Public Services – adult & child care, airports, schools, libraries;

•Public Safety – police & fire stations, vehicles, jails.

Community Facilities Guaranteed Loans

• Community facilities - such as health care clinics, assisted living facilities, police and fire stations, and schools -are essential to the quality of life in rural communities

• Work with local lenders - to offer loan guarantees • 90% guarantee• Banks rates & terms

Community Facility Direct Loans

• Fixed Interest Rates

usually around 4.5%

• Up to 40 Year Terms

• Available in communities under 20,000 population.

Community Facilities Grants• Grants used to assist lower income rural areas in

developing essential public community facilities

• Very modest funding available in normal yearly funding - $150,000– 06/01/2011 usual deadline to request funds from National Office

• FY 2011 special Economic Impact Initiative grants for qualified counties based on unemployment and poverty levels (not sure of funding).

Are you CF Grant Eligible?

• Factors the agency considers– Available resources

– Cash flow /budget

– Median Household Income • Kadoka, SD – MHI is $26,875 so 35% eligible

• Jackson County MHI is $23,945 so up to 55% eligible

• Belvidere, SD – MHI is $26,250 up to 35% eligible

• Consider service territory of who will be served

South Dakota RD Office LocationsAberdeen (605)224-3360

Mitchell (605)996-1564

Pierre (605)224-8870

Rapid City (605)342-0301

Sioux Falls (605)330-4515

Watertown (605)886-8202

Yankton (605)665-2662

www.rurdev.usda.gov/sd

USDA Rural DevelopmentState Office

200 4th Street SW, Federal Building Rm. 210Huron, SD 57350-2477

(605) 352-1100 or 1-800-670-6553