Do You Qualify For A Rural Energy Loan?

Loan’s For Small Business to Install Renewable Energy Systems


  • Provides another tool to expand lender’s loan portfolio in rural areas
  • Enables lenders to increase earnings through participation in the secondary market
  • Allows lenders to make loans above their legal lending limits
  • May satisfy Community Reinvestment Act requirements (Social & Economic Impact)


Agricultural Producers and Rural Small Businesses

  • Potential for higher loan amounts, lower interest rates, and longer repayment terms
  • Assists an agricultural producer or small business
in providing stability, growth, and expansion through energy efficient improvements and renewable energy
  • Maximum = $25 million • Minimum = $5,000
Guarantee
  • 85% for loans of $600,000 or less
  • 80% for loans greater than $600,000 up to and including $5 million
  • 70% for loans greater than $5 million up to and including $10 million
  • 60% for loans greater than $10 million

All collateral must secure the entire loan

  • Repayment must be reasonably assured
  • Personal and corporate guarantees are required
  • Appraisal reports prepared by qualified individuals are required on property that will serve as collateral

Loan to Appraised Value

  • Lenders will discount collateral consistent with sound loan-to-value policy
  • Discounted collateral value must be equal to the loan amount

Credit Quality

  • Lender addresses the borrower’s equity, cash  flow, collateral, history, and management and repayment ability in a written credit analysis

Servicing

  • Annual  financial statements prepared in accordance with Generally Accepted Accounting Principles(GAAP) are required
  • Lenders will service and, if necessary, service the loans (with USDA Rural Development concurrence)

Interest Rate

  • Interest rates may be  fixed or variable
  • The rate is negotiated between the lender and borrower
  • Variable rates can be adjusted quarterly

Maximum Term

  • Working capital – 7 years
  • Machinery and equipment – 15 years (or useful life)
  • Real estate – 30 years
  • Fees and Costs
  • One-time guarantee fee of 1 percent of the guaranteed principal amount paid by lender
  • Other typical lender costs may also be incurred• Annual renewal fee determined each  fiscal year• A feasibility study may be required

Credit Quality

  • Lender addresses the borrower’s equity, cash  flow, collateral, history, and management and repayment ability in a written credit analysis

Servicing

  • Annual  financial statements prepared in accordance with Generally Accepted Accounting Principles(GAAP) are required
  • Lenders will service and, if necessary, service the loans (with USDA Rural Development concurrence)

Other

  • The maximum loan guarantee is 75% of the project costs
  • Loan Guarantee is issued after construction is completed and the facility is operational

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Contact us now
to find out more  information and if you
qualify for a Rural Energy Loan.

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