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| Objective: | To provide loans up to $25,000 to very small businesses underserved by conventional lenders. |
| Eligibility: | Small, independently-owned businesses that are not dominant in their fields; size limitations vary from industry to industry (typically capped at 500 employees). |
| Cost: | No application fee. |
| Services: | Financial assistance in the form of loans made through intermediaries. |
Description
The Microloan Program was developed by the Small Business Administration (SBA) to increase small business access to financing and technical assistance. It addresses a serious capital gap in areas underserved by conventional private lenders because of economic downturns, business's lack of collateral, or the small size of needed loan amounts. Through this program, small enterprises can borrow up to $25,000 for the purchase of machinery and equipment, furniture and fixtures, inventory, supplies, and working capital. These funds, however, cannot be used to pay existing debt. The SBA does not make the microloans directly; rather, the agency certifies intermediary lenders — which can be private, non- profit or quasi-governmental organizations — to carry out the program at the local level. Currently, 101 intermediaries are located in the U.S., although not all areas are served. SBA is expected to authorize an additional 100 lending agents by early 1996. For a complete list of lenders and service areas, see the Contact section of this profile.
More than 15 percent of the loans supported by this program have gone to small manufacturers. Service-sector businesses have used this program most frequently. Loan proceeds have been employed for a variety of purposes, with about 40 percent used for working capital, 32 percent to purchase equipment, and 17 percent to build inventories.
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To increase the access of very small firms to technical advice and assistance, the Microloan Program funds 25 non-lending technical assistance providers that help low-income individuals seeking to start or enlarge their small business concerns. Types of assistance include counseling on marketing strategies, management skills, and technical advice.
Application Process
Businesses interested in applying for a microloan need only call the nearest intermediary listed below. Each intermediary has its own application process and collateral requirements, but none is allowed to charge application fees. The average loan amount for this program is $10,617, for an average term of 42 months. Microloans must be repaid over the shortest period possible, depending on business earnings, and they are not available for terms over six years. The interest rates charged range from 6 percent to 13.25 percent, with the average rate at 10.38 percent; rates cannot be higher than 4 percentage points over the prime rate. Start-up businesses received 40.1 percent of the microloans made in 1994; borrowers in rural areas received 42.2 percent of the loans, with urban borrows receiving the remaining 47.8 percent.
Impact
Since the program's inception in 1992, intermediaries have made 2,993 microloans, worth more than $31.7 million. During this time period, more than 15 percent of these loans have been made to manufacturing firms. Borrowers most often use loan proceeds for working capital or to purchase equipment.
Success Stories
1) One student's frustration with hard dorm mattresses led him to purchase his own from a wholesale company in western Pennsylvania. He later sold mattresses to his fellow students, and upon graduation started Eggshell Foam, Inc., which bought mattress cushions for resale through university bookstores. The company started out selling to nine schools in western Pennsylvania, Maryland, and West Virginia. The company sought financing from the Washington County Council on Economic Development, which provided a $6,700 SBA Microloan to cover some of the firm's major orders. As of November 1994, the company had supplied The College Mattress pad to more than 60 colleges and universities in 11 states, and it is still growing.
2) A couple in 1988 started a home-based business called Lakeshore Custom Canvas. In October 1993, they applied for a loan through Northern Community Investment Corporation (NCIC) in St. Johnsbury, Vermont, to buy a commercial sewing machine, a tube bender, and an inventory of canvas yard goods and metal fasteners. In addition, they hoped to borrow the funds to attend two classes in the production of specialty canvas products. After reviewing the business plan, NCIC offered the company a loan through the SBA Microloan program. Business has been good through 1994, with customers often leaving their boats tied to the Lakeshore Custom Canvas dock. Lakeshore Custom Canvas has met its projections of a year ago and looks forward to expanding in the upcoming year.
Future Prospects
The 104th Congress has not made any changes to the Microloan program as part of its review of SBA programs during reauthorization. The program is expected to double the number of intermediaries in early 1996, which will increase the area covered.
Contact
To apply for a Microloan, a manufacturer must contact the local intermediary. A list of current lending intermediaries and technical assistance providers is provided below. Because the Microloan program will be expanded in 1996, an interested manufacturer may call the SBA's Small Business Answer Desk (1-800-U-ASK-SBA; TDD users, 202-205-7333) or the Office of Financial Assistance at the number below to check for newly authorized loan providers. The SBA district offices can also provide more information on the Microloan program and help counsel potential borrowers on other available programs and provide general assistance. A list of SBA district offices can be found under the Section 7(a) program profile on page 10. Small Business Development Centers (SBDCs) also can help small business owners put together business plans and loan applications, as well as provide other types of business and managerial assistance. See the SBDC profile in this guidebook for a description of services, locations, and phone numbers. General information on the Microloan program is available through SBA on-line services; those phone numbers and address are listed below.
Office of Financial Assistance
Small Business Administration
409 Third Street, SW
Washington, D.C. 20416
202-205-6490
SBA Bulletin Board:
1-800-697-4636 (outside D.C.)
401-9600 (D.C. access)
Internet Address:
telnet://sbaonline.sba.gov
http://www.sbaonline.sba.gov
Intermediary Lenders (as of October 1995) ALABAMA Elmore Community Action Committee, Inc. 1011 West Tallassee P.O. Drawer H Wetumpka, AL 36092 205-567-4361 Service Area: Autauga, Elmore, and Montgomery counties ALASKA No local intermediaries ARIZONA Chicanos Por La Causa, Inc. 1112 E. Buckeye Road Phoenix, AZ 85034 602-257-0700 Service Area: Urban areas of Maricopa and Pima, Graham, Gila, Coconino, Mohave, Yavapai, and La Paz counties PPEP Housing Dev. Corp/Micro Industry Credit Rural Organization 802 East 46th Street Tucson, AZ 85713 602-622-3553 Service Area: Cochise, Santa Cruz, rural Maricopa, rural Pinal, and rural Yuma counties ARKANSAS Arkansas Enterprise Group 605 Main Street, Suite 203 Arkadelphia, AR 71923 501-246-9739 Service Area: Southern portion of the state Delta Community Development Corp 675 Eaton Road P.O. Box 852 Forrest City, AR 72335 501-633-9113 Service Area: Cross, Crittenden, Monroe, Lee, and St. Francis counties White River Planning and Dev. District, Inc. 1652 White Drive P.O. Box 2396 Batesville, AR 72503 501-793-5233 Service Area: Cleburne, Fulton, Independence, Izard, Jackson, Sharp, Stone, Van Buren, White, and Woodruff counties CALIFORNIA Arcata Economic Development Corporation 100 Ericson Court, Suite 100 Arcata, CA 95521 707-822-4616 Service Area: Del Norte, Humboldt, Mendocino, Siskiyou, and Trinity counties Center for Southeast Asian Refugee Resettlement 875 O'Farrell Street San Francisco, CA 94109 415-885-2743 Service Area: Alameda, Contra Costa, Marin, Merced, Sacramento, San Francisco, San Joaquin, San Mateo, Santa Clara, and Stanislaus counties Coalition for Women's Economic Development 315 West Ninth Street, Suite 705 Los Angeles, CA 90015 213-489-4995 Service Area: Los Angeles County Valley Rural Development Corporation 3417 W. Shaw, Suite 100 Fresno, CA 93711 209-271-9030 Service Area: Fresno, Kings, Kern, Stanislaus, Madera, Mariposa, Merced, Tuolumne, and Tulare counties COLORADO Greater Denver Local Development Corporation P. O. Box 2135 Denver, CO 80206 303-296-9535 Service Area: City of Denver, and Adams, Arapahoe, Boulder, Denver, and Jefferson counties Region 10 LEAP, Inc. P.O. Box 849 Montrose, CO 81402 303-249-2436 Service Area: West Central area including Delta, Gunnison, Hinsdale, Montrose, Ouray and San Miguel counties CONNECTICUT New Haven Community Investment Corp. 809 Chapel Street, 2nd Floor New Haven, CT 06510 203-776-6172 Service Area: Statewide DELAWARE Wilmington Economic Development Corp 605-A Market Street Mall Wilmington, DE 19801 302-571-9088 Service Area: New Castle county, in the cities of Wilmington, Newark, New Castle, Middletown, Odessa, and Townsend DISTRICT OF COLUMBIA ARCH Development Corporation 1227 Good Hope Road, SE Washington, DC 20020 202-889-5023 Service Area: Portions of the District of Columbia commonly referred to as Adams Morgan, Mount Pleasant and Anacostia, Congress Heights, Columbia Heights, and 14th Street Corridor H Street Development Corporation 611 H Street, NE Washington, DC 20002 202-544-8353 Service Area: Portions of the District of Columbia including specific areas of the Northeast, Southeast and Northwest quadrants FLORIDA Community Equity Investments Inc. 302 North Barcelona Street Pensacola, FL 32501 904-444-2234 Service Area: Western Panhandle including Bay, Calhoun, Escambia, Gadsden, Gulf, Jackson, Holmes, Liberty, Leon, Franklin, Wakulla, Walton, Washington, Okaloosa, and Santa Rosa counties United Gainesville Community Development Corporation P.O. Box 2518 Gainesville, FL 32602 904-376-8891 Service Area: North Central section including Alachua, Bradford, Columbia, Dixie, Gichrist, Hamilton, Jefferson, LaFayette, Levy, Madison, Marion, Putman, Suwanee, Taylor, and Union counties GEORGIA Fulton County Development Corp Greater Atlanta Small Business Project 10 Park Place South, Suite 305 Atlanta, GA 30303 404-659-5955 Service Area: Fulton, Dekalb, Cobb, Gwinnett, Fayette, Clayton, Henry, Douglas, and Rockdale counties Small Business Assistance Corporation 31 West Congress Street, Suite 100 Savannah, GA 31401 912-232-4700 Service Area: Chatham, Effingham, Bryan, Bulloch, and Liberty counties HAWAII The Immigrant Center 720 North King Street Honolulu, HI 96817 808-845-3918 Service Area: Island of Oahu within the City and County of Honolulu IDAHO Panhandle Area Council 11100 Airport Drive Hayden, ID 83835-9743 208-772-0584 Service Area: Northern Panhandle including Benewah, Bonner, Boundary, Kotenai, and Shoshone counties ILLINOIS Greater Sterling Development Corporation 1741 Industrial Drive Sterling, IL 61081 815-625-5255 Service Area: City of Sterling and Whiteside and Lee counties Illinois Development Finance Authority 233 South Wacker Drive, Suite 5310 Chicago, IL 60606 312-793-5586 Service Area: Statewide with the exceptions of Peoria, Tazwell, Woodford, Whiteside, and Lee counties, the City of Sterling, and portions of Chicago currently served by WSEP The Economic Dev. Council for the Peoria Area 124 SW Adams Street, Suite 300 Peoria, IL 61602 309-676-7500 Service Area: Peoria, Tazwell and Woodford counties The Neighborhood Institute and Women's Self Employment Project 20 North Clark Street, Suite 400 Chicago, IL 60602 312-606-8255 Service Area: Portions of the City of Chicago INDIANA Eastside Community Investments Inc. 26 North Arsenal Avenue Indianapolis, IN 46201 317-637-7300 Service Area: City of Indianapolis Metro Small Business Assistance Corp. 1 NW Martin Luther King, Jr. Blvd. Evansville, IN 47708-1869 812-426-5857 Service Area: Vanderburgh, Posey, Gibson, and Warrick IOWA Siouxland Economic Development Corporation 400 Orpheum Electric Building P.O. Box 447 Sioux City, IA 51102 712-279-6286 Service Area: Cherokee, Ida, Monoma, Plymouth, Sioux, and Woodbury counties KANSAS South Central Kansas Economic Development District, Inc. 151 North Volutsia Wichita, KS 67214 316-683-4422 Service Areas: Butler, Chautauqua, Cowley, Elk, Greenwood, Harper, Harvey, Kingman, Marion, McPherson, Reno, Rice, Sedgwick and Sumner counties Center for Business Innovations, Inc. 4747 Troost Avenue Kansas City, MO 64110 816-561-8567 Service Areas: Wyandotte, Johnson, Kansas City, and Leavenworth KENTUCKY Kentucky Highlands Investment Corporation 362 Old Whitley Road London, KY 40741 606-864-5175 Service Area: Bell, Clay, Clinton, Harlan, Jackson, Knox, Laurel, McCreary, Pulaski, Rockcastle, Wayne, and Whitley counties Purchase Area Development District P.O. Box 588 Mayfield, KY 42066 502-247-7171 Service Area: Western Kentucky including Ballard, Calloway, Carlisle, Futon, Graves, Hickman, McCracken and Marshall counties LOUISIANA Greater Jennings Chamber of Commerce P.O. Box 1209 Jennings, LA 70546 318-824-0933 Service Area: Jeff Davis Parish MAINE Coastal Enterprises, Inc P.O. Box 268 Wiscasset, ME 04578 207-882-7552 Service Area: Statewide excluding Aroostock, Piscataquis, Washington, Oxford, Penobscot and Hancock counties Northern Maine Regional Planning Commission P.O. Box 779 Caribou, ME 04736 207-498-8736 Service Area: Aroostook, Piscataquis, Washington, Penobscot and Hancock counties Community Concepts, Inc. P.O. Box 278 South Parris, ME 04281 207-743-7716 Service Area: Oxford County MARYLAND Council for Equal Business Opportunity, Inc. The Park Plaza 800 North Charles Street, Suite 300 Baltimore, MD 21201 410-576-2326 Service Area: City of Baltimore and Ann Arundel, Baltimore, Carroll, Harford, and Howard counties MASSACHUSETTS Economic Dev. Industrial Corporation of Lynn 37 Central Square, 3rd Floor Lynn, MA 01901 617-592-2361 Service Area: City of Lynn Jobs for Fall River, Inc. One Government Center Fall River, MA 02722 508-324-2620 Service Area: City of Fall River Springfield Business Development Fund 36 Court Street, Room 222 Springfield, MA 01103 413-787-6050 Service Area: City of Springfield Western Massachusetts Enterprise Fund 324 Wells Street Greenfield, MA 01301 413-774-7204 Service Area: Berkshire, Franklin counties, towns of Chester & Chicopes in Hampden county, towns of Athol, Petersham, Phillipston & Royalston in Worcester county and the following towns within Hampshire county: Amherst, Chesterfield, Cummington, Easthampton, Goshen, Hadley, Huntington, Middlefield, Northampton, Plainfield, Westhampton, Williamsburg and Worthington MICHIGAN Ann Arbor Community Development Corp 2008 Hogback Road, Suite 2A Ann Arbor, MI 48105 313-677-1400 Service Area: Washtenaw County Detroit Economic Growth Corporation 150 West Jefferson, Suite 1500 Detroit, MI 48226 313-963-2940 Service Area: City of Detroit Flint Community Development Corp 877 East Fifth Avenue, Building C-1, Flint, MI 48503 810-239-5847 Service Area: Genesee County Northern Economic Initiatives Corp 1009 West Ridge Street Marquette, MI 49855 906-228-5571 Service Area: Upper Peninsula including Alger, Baraga, Chippewa, Delta, Dickinson, Gogebic, Houghton, Iron, Keewenaw, Luce, Macinac, Marquette, Menonimee, Ontonagon, and Schoolcraft counties MINNESOTA Northeast Entrepreneur Fund, Inc. Olcott Plaza, Suite 140 820 Ninth Street North Virginia, MN 55792 218-749-4191 Service Area: Koochiching, Itasca, St. Louis, Aitkin, Carlton, Cook and Lake counties Women Venture 2324 University Avenue St. Paul, MN 55114 612-646-3808 Service Area: Cities of Minneapolis and St. Paul and, Andra, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Washington, and Wright counties Minneapolis Consortium of Community Developers 1808 Riverside Avenue Minneapolis, MN 55454-1035 612-338-8729 Service Area: Portions of Minneapolis Northwest Minnesota Initiative Fund 722 Paul Bunyan Drive, NW Bemidji, MN 56601 218-759-2057 Service Area: Beltrami, Clearwater, Hubbard, Kittsson, Lake of the Woods, Mahnomen, Marshall, Norman, Pennington, Polk, Red Lake, and Rousseau counties MISSISSIPPI Delta Foundation 819 Main Street Greenville, MS 38701 601-335-5291 Service Area: Statewide excluding Issaquena, Sharkey, Humphreys, Madison, Leake, Kemper, Copiah, Hinds, Rankin, Newton, Smith, Jasper, Clarke, Jones, Wayne, and Greene counties Friends of Children of Mississippi, Inc. 4880 McWillie Circle Jackson, MS 39206 601-362-1541 Service Area: Issaquena, Sharkey, Humphreys, Madison, Leake, Kemper, Copiah, Hinds, Rankin, Newton, Smith, Jasper, Clarke, Jones, Wayne, and Greene counties MISSOURI Center for Business Innovations, Inc. 4747 Troost Avenue Kansas City, MO 64110 816-561-8567 Service Area: Statewide MONTANA Capital Opportunities/ District IX Human Resource Development Council, Inc. 321 East Main Street, Suite 300 Bozeman, MT 59715 406-587-4486 Service Area: Gallatin, Park, and Meagher counties Women's Opportunity and Resource Development, Inc. 127 N. Higgins Avenue Missoula, MT 59802 406-543-3550 Service Area: Lake, Mineral, Missoula, Ravalli, and Sanders counties NEBRASKA Rural Enterprise Assistance Project P.O. Box 406 Walthill, NE 68067 402-846-5428 Service Area: Boone, Brown, Burt, Cass, Cherry, Colfax, Custer, Dixon, Gage, Greeley, Jefferson, Johnson, Keya Paha, Knox, Lancaster, McPherson, Nance, Nemaha, Pierce, Rock, Saline, Saunders, Seward, Thurston and Wayne counties West Central Nebraska Dev. District, Inc. P.O. Box 599 Ogailala, NE 69153 308-284-6077 Service Area: Arthur, Chase, Dawson, Dundy, Frontier, Furnas, Gosper, Grant, Hayes, Hitchcock, Hooker, Keith, Lincoln, Logan, Perkins, Red Willow and Thomas counties NEVADA Nevada Women's Fund 210 S. Sierra Street, Suite 100 Reno, Nevada 89501 702-786-2335 Service Area: Statewide NEW HAMPSHIRE Institute for Cooperative Community Development, Inc. 2500 North River Road Manchester, NH 03106 603-644-3103 Service Area: Statewide excluding Grafton, Carol and Coos counties Northern Community Investment Corp. c/o 20 Main Street St. Johnsbury, VT 05819 802-748-5101 Service Area: Grafton, Carol and Coos counties NEW JERSEY Trenton Business Assistance Corp Division of Economic Development 319 East State Street Trenton, NJ 08608-1866 609-989-3509 Service Area: portions of the City of Trenton Greater Newark Business Dev. Consortium One Newark Center, 22nd Floor, Newark, NJ 07102-5265 201-242-6237 Service Area: Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Passaic, and Somerset counties with the exception of the city of Jersey City Union County Economic Development Corp Liberty Hall Corporate Center 1085 Morris Avenue, Suite 531 Union, NJ 07083 908-527-1166 Service Area: Union County Jersey City Economic Development Corp. 601 Pavonia Avenue Jersey City, NJ 07306 201-420-7755 Service Area: City of Jersey City NEW MEXICO Women's Economic Self Sufficiency Team 414 Silver South West Albuquerque, NM 87102-3239 505-848-4760 Service Area: Statewide NEW YORK Adirondack Economic Development Corp. P.O. Box 747 Saranac Lake, NY 12983 518-891-5523 Service Area: Clinton, Essex, Franklin, Fulton, Hamilton, Herkimer, Jefferson, Lewis, Oneida, Oswego, St. Lawrence, Saratoga, Warren and Washington counties Hudson Development Corp. 444 Warren Street Hudson, NY 12534 518-828-3373 Service Area: Columbia County Manhattan Borough Development Corp. 15 Park Row, Suite 510 New York, NY 10038 212-791-3660 Service Area: The borough of Manhattan Rural Opportunities, Inc. 339 East Avenue Rochester, NY 14604 716-546-7180 Service Area: Allegheny, Cattaraugua, Cayuga, Chatauqua, Erie, Genessee, Livingston, Niagara, Ontario, Orleans, Senece, Steuben, Wayne, Wyoming, and Yates counties NORTH CAROLINA Self-Help Ventures Fund 413 East Chapel Hill Street Durham, NC 27701 919-956-8526 Service Area: Statewide NORTH DAKOTA Lake Agassiz Regional Council 417 Main Avenue Fargo, ND 58103 701-239-5373 Service Area: Statewide OHIO Enterprise Development Corporation (formerly Athens Small Business Center, Inc.) 900 East State Street Athens, OH 45701 614-592-1188 Service Area: Adams, Ashland, Athens, Belmont, Brown, Carrol, Columbiana, Coshocton, Gallia, Guernsey, Harrison, Highland, Holmes, Jackson, Jefferson, Knox, Lawrence, Meigs, Monroe, Morgan, Muskingum, Nocking, Noble, Perry, Pike, Ross, Scioto, Tuscarawas, Vinton and Washington counties Columbus Countywide Development Corp 941 Chatham Lane, Suite 207 Columbus, OH 43221 614-645-6171 Service Area: Franklin County and the City of Columbus Hamilton County Development Co., Inc. 1776 Mentor Avenue Cincinnati, OH 45212 513-632-8292 Service Area: City of Cincinnati and, Adams, Brown, Butler, Clermont, Clinton, Highland, and Warren counties Women's Entrepreneurial Growth Organization of NE Ohio 58 West Center Street, Suite 228 Akron, OH 44308 216-535-4523 Service Area: Ashtabula, Cuyahoga, Geauga, Lake, Lorain, Mahoning, Medina, Portage, Stark, Summit, Trumbull, Wayne OKLAHOMA Rural Enterprises, Inc. 422 Cessna Street Durant, OK 74701 405-924-5094 Service Area: Statewide Tulsa Economic Development Corp. 130 North Greenwood Avenue, Suite G, Tulsa, OK 74120 918-585-8332 Service Area: Adair, Canadian, Cherokee, Cleveland, Craig, Creek, Delaware, Haskell, Hayes, Hughes, Kay, Latimer, Leflore, Lincoln, Logan, McIntosh, Muskogee, Noble, Nowata, Okfuskee, Oklahoma, Okmulgee, Osage, Ottawa, Pawnee, Payne, Pittsburg, Pottawatomie, Rogers, Seminole, Sequoyah, Wagoner, Washington, and Wayne counties including the city of Tulsa OREGON Cascades West Financial Services, Inc. 408 SW Monroe Street Corvallis, OR 97333 503-757-6854 Service Area: Benton, Clackamas, Hood River, Jefferson, Lane, Lincoln, Linn, Marion, Multnomah, Polk, Tillamook, Pasco, Washington, Yamhill PENNSYLVANIA The Ben Franklin Technology Center of Southeastern Pennsylvania 3624 Market Street Philadelphia, PA 19104-2615 215-382-0380 Service Area: Bucks, Chester, Delaware, Montgomery and Philadelphia counties Washington County Council on Economic Dev. 703 Courthouse Square Washington, PA 15301 412-228-6816 Service Area: Southwestern area of Pennsylvania including Greene, Fayette and Washington Counties York County Industrial Development Corp One Market Way East York, PA 17401 717-846-8879 Service Area: York County SOUTH CAROLINA Charleston Citywide Local Development Corp. 496 King Street Charleston, SC 29403 803-724-3796 Service Area: City of Charleston Santee Lynches Regional Development Corp. 115 North Harvin Street, 4th Floor, Sumter, SC 29151-1837 803-775-7381 Service Area: Clarendon, Kershaw, Lee and Sumter counties SOUTH DAKOTA NE South Dakota Energy Conservation Corp. 414 Third Avenue, East Sisseton, SD 57262 605-698-7654 Service Area: Beadle, Brown, Buffalo, Campbell, Clark, Codington, Day, Edmunds, Faulk, Grant, Hand, Hyde, Jerauld, Kingsbury, McPherson, Marshall, Miner, Potter, Roberts, Sanborn, Spink, and Walworth counties TENNESSEE South Central Tennessee Development District P. O. Box 1346 Columbia, TN 38402 615-318-2040 Service Area: Bedford, Coffee, Franklin, Giles, Hickman, Lawrence, Lewis, Lincoln, Marshall, Maury, Moore, Perry, and Wayne counties TEXAS Business Resource Center Incubator 4601 N. 19th Street Waco, TX 76708 817-754-8898 Service Area: Bell, Bosque, Coryell, Falls, Hill, and McLennan counties San Antonio Local Development Corp 100 Military Plaza, 4th Floor City Hall San Antonio, TX 78205 210-299-8080 Service Area: Atascosa, Bandera, Bexar, Comal, Frio, Gillespie, Guadalupe, Karnes, Kendall, Kerr, Medina, and Wilson counties Southern Dallas Development Corporation 1402 Crinth, Suite 1150 Dallas, TX 75215 214-428-7332 Service Area: Portions of the City of Dallas UTAH Utah Technology Finance Corporation 177 East 100 South Salt Lake City, UT 84111 801-364-4346 Service Area: Carbon, Emery, Grand, Iron, Juab, Milard, Salt Lake County, San Juan, Sanpete, Sevier, Tooele, Washington and parts of Utah and Weber counties VERMONT Economic Dev. Council of Northern Vermont 155 Lake Street St. Albans, VT 05478 802-524-4546 Service Area: Chittenden, Franklin, Grand Isle, Lamoille, and Washington counties Northern Community Investments Corporation 20 Main Street St. Johnsbury, VT 05819 802-748-5101 Service Area: Caledonia, Essex, and Orleans counties VIRGINIA Ethiopian Community Dev. Council, Inc. 1038 S. Highland Street Arlington, VA 22204 703-685-0510 Service Area: Prince William, Arlington and Fairfax counties and the cities of Alexandria and Falls Church Business Development Centre, Inc. 147 Mill Ridge Road Lynchburg, VA 24502 804-582-6100 Service Area: Amherst, Appomattox, Bedford, Campell counties, cities of Lynchburg and Bedford, and the Town of Amherst People, Incorporated of Southwest Virginia 988 West Main Street Abingdon, Virginia 24210 703-628-9188 Service Area: Buchanan, Dickenson, Lee, Russell, Scott, Washington, Wise counties and the cities of Bristol and Norton WASHINGTON Snohomish County Private Industry Council 917 134th Street, SW, Suite A-10 Everett, Washington 98204 206-743-9669 Service Area: Adams, Chelan, Douglas, Grant, King, Kittitas, Klickitat, Okanogan, Pierce, Skagit, Snohomish, Whatcom, and Yakima counties Tri-Cities Enterprise Association 2000 Logston Boulevard Richland, WA 99352 509-375-3268 Service Area: Benton and Franklin counties WEST VIRGINIA Ohio Valley Industrial and Business Development Corp. 12th and Chapline Streets Wheeling, WV 26003 304-232-7722 Service Area: Marshall, Ohio, Wetzel, Brooke, Hancock, and Tyler counties WISCONSIN No local intermediary WYOMING No local intermediary Technical Assistance Providers (as of October 1995) ALASKA Southeast Alaska Small Business Dev. Center 400 Willoughby Ave., Suite 211, Juneau, AK 99801-1724 907-463-3789 Service Area: Through SBDC system, the Alaska Panhandle CALIFORNIA Women's Initiative for Self Employment 450 Mission St., Suite 402 San Francisco, CA 94105 415-247-9473 Service Area: defined sectors of the San Francisco Bay Area CONNECTICUT American Woman's Economic Dev. Corporation Plaza West Office Centers 200 West Main St., Suite 140 Stamford, CT 06902 203-326-7914 Service Area: Southwest corner of state DISTRICT OF COLUMBIA American Women's Economic Dev. Corporation Washington D.C. Regional Training Center 1250 24th St., NW, Suite 120 Washington, DC 20037 202-857-0091 Service Area: District of Columbia FLORIDA Lee County Employment & Economic Development Corporation P.O. Box 2285 Fort Myers, FL 33902-2285 813-337-2300 Service Area: Community Redevelopment Areas of Lee County including Charleston Park, Dunbar, Harlem Heights, North Fort Myers, and State Road 80 ILLINOIS Women's Business Development Center 8 South Michigan Ave., Suite 400 Chicago, IL 60603 312-853-3477 Service Area: Boone, Cook, DeKalb, DuPage, Kane, Kankakee, Kendall, Lake, McHenry, Will, and Winnebago counties INDIANA Hoosier Valley Economic Development Corp. P.O. Box 843 Jeffersonville, IN 47131-0843 812-288-6451 Service Area: Clark, Crawford, Floyd, Harrison, Orange, Scott, and Washington counties IOWA Institute for Social and Economic Development 1901 Broadway, Suite 313 Iowa City, IA 52240 319-338-2331 Service Area: Statewide KANSAS Great Plains Development, Inc. P.O. Box 1116 Dodge City, KS 67801 316-227-6406 Service Area: State of Kansas KENTUCKY Community Ventures Corporation 200 West Vine St., Fifth Floor, Lexington, KY 40507 606-281-5475 Service Area: Anderson, Bourbon, Clark, Fayette, Harrison, Jessamine, Nicholas, Scott, and Woodford counties MASSACHUSETTS Jewish Vocational Service, Inc. 105 Chauncy St., 6th Floor Boston, MA 02111 617-451-8147 Service Area: Greater Boston (with particular emphasis on the Mattapan, North Dorchester, Central Square, and Cambridge neighborhoods) MICHIGAN Cornerstone Alliance 185 E. Main, Benton Harbor, Berrien County, MI 49022-4440 616-925-6100 Service Area: The city of Benton Harbor and Berrien County MINNESOTA Neighborhood Development Center, Inc. 663 University Avenue St. Paul, MN 55104 612-290-8150 Service Area: Districts 3, 5, 6, 8, 9, and 16 of the City of St. Paul MISSOURI Community Dev. Corporation of Kansas City 2420 East Linwood Blvd, Suite 400, Kansas City, MO 64109 816-924-5800 Service Area: Cass, Clay, Platte, Ray and Jackson counties MONTANA Montana Dept. of Commerce-SBDC Division P.O. Box 200501 Helena, MT 59620-0501 406-444-4780 Service Area: Through the SBDC network, Cascade, Chouteau, Fergus, Glacier, Golden Valley, Judity Basin, Musselshell, Petroleum, Pondera, Teton, Toole and Wheatland counties, and the Blackfeet, Flathead, and Fort Peck Reservations, and the Crow, Fort Belknap, Northern Cheyenne and Rocky Boys Reservations and their Trust Lands NEBRASKA Omaha Small Business Network, Inc. 2505 North 24th Street Omaha, NE 68110 402-346-8262 Service Area: Areas within the City of Omaha NEW JERSEY New Jersey Small Business Dev. Center 180 University Avenue Newark, NJ 07102-1895 201-648-5950 Service Area: Statewide, through the SBDC network NEW MEXICO New Mexico Community Dev. Loan Fund P.O. Box 705 Albuquerque, NM 87103-0705 505-243-3196 Service Area: statewide NEW YORK Brooklyn Economic Development Corporation 30 Flatbush Avenue, Suite 420, Brooklyn, NY 11217-1197 718-522-4600 Service Area: Five boroughs of New York City NORTH CAROLINA North Carolina Economic Dev. Center, Inc. 4 North Blount Street, 2nd Floor, Raleigh, NC 27601 919-715-2725 Service Area: statewide OHIO Women Entrepreneurs, Incorporated 36 East Fourth Street, Suite 925 Cincinnati, OH 45202 513-684-0700 Service Area: Brown, Butler, Clermont, Hamilton, and Warren counties PENNSYLVANIA Philadelphia Commercial Dev. Corporation 1315 Walnut Street, Suite 600 Philadelphia, PA 19107 215-790-2200 Service Area: Bucks, Montgomery, Philadelphia, Chester, and Delaware counties TEXAS Corpus Christi Chamber of Commerce/SBDC P.O. Box 640 Corpus Christi, TX 78403 512-882-6161 Service Area: Nueces and San Patricio counties VERMONT Champlain Valley Office of Economic Opportunity, Inc. 191 North Street Burlington, VT 05401 802-862-2771 Service Area: State of Vermont VIRGINIA The Commonwealth of VA Department of Economic Development 1021 East Cary Street Richmond, VA 23219 804-371-8253 Service Area: Statewide, through the SBDC network
Industrial Development Bonds: Tax-Exempt Small-Issues
| Objective: | To provide below-market-rate financing to manufacturers for new construction, plant and facility improvements, and equipment acquisition related to manufacturing projects. |
| Eligibility: | Any U.S. manufacturer. |
| Cost: | Legal and other bond issuance fees generally are borne by the business beneficiary and usually total at least $100,000, even for small issuances; they can be much higher for larger projects. |
| Services: | Low-cost financing, obtained through tax-exempt bond issuances. |
Description
Tax-exempt, small-issue industrial development bonds (IDBs) are the only remaining federal economic development tax incentives targeted solely to manufacturing. Small-issue IDBs encourage economic development activities by offering existing and prospective manufacturers affordable financing that otherwise might not be available. Federal law authorizes states, local governments, and various quasi-public agencies to issue IDBs. Proceeds can cover the cost of constructing new manufacturing plants, improving existing facilities, or buying new equipment. The bonds are payable from and secured 2by the revenues of the projects they finance. IDBs are appealing to investors because the interest they bear is exempt from federal taxation, and to issuing jurisdictions because they can provide or leverage capital at less than market rates for projects that will benefit the community.
Parties involved in IDB transactions include: the agency or authority legally able to issue the bonds; the borrower that uses the bond proceeds to finance some sort of development activity; a bank or similar entity that provides a letter of credit to enhance the bond's rating; an investment banker who structures and often helps sell the bonds; other bond marketing agents; and the bond counsel.
The popularity of IDBs stems from their versatility as a development finance tool. Numerous options are available in structuring an IDB; they are issued for long or short terms, and can carry a fixed interest rate or a floating rate — usually one quarter to one third less than the prime. The project's income is pledged to repay the obligation. Private corporations use them and back them with their own credit. Thus, the issuing jurisdiction or agency bears little or no fiduciary risk in the transaction. IDBs have the advantage of giving small and inexperienced business borrowers access to securities markets they otherwise would not have.
Application Process
Any manufacturer can seek IDB-backed financing for a project, although jurisdictions — aware of the volume limits (the greater of $50 per capita or $200 million) and of competition among issuers for a state's available issuing authority — may target their support to areas consistent with their own economic development objectives. Each state sets its own priorities to allocate its permitted level of issuances. There is no formal application process as such, but each project follows similar steps, which include: identifying an IDB-issuing agency or organization and exploring the project concept with them; consulting with a bond counsel to determine project eligibility; working with an investment banker to structure the IDB to meet the borrower's needs; seeking formal issuing-authority approval of the project; obtaining credit support; submitting necessary legal documentation to one or more of the bond-rating organizations; issuing the bonds; and, finally, marketing them. All parties meet at a bond closing in which all documentation and legal agreements are formally signed, the bonds are delivered to their purchaser, and funds are transmitted to the borrower to undertake the project.
Impact
The limit on the value of a single bond issue is $10 million, a factor that helps target the bonds to smaller companies. The average bond issue of $1.6 million creates 25 new jobs in, or related to, manufacturing. Since volume restrictions were adopted in 1986, between $2 billion and $3 billion worth of small-issue IDBs are issued nationally in a typical year. IDB-assisted projects carried out over the last 15 years employ more than 1.6 million people; experts suggest that more than 300,000 of these jobs would not exist if company owners had not been able to secure IDB financing.
Success Stories
1) A $3-million IDB was a central part of the incentive package that brought the Spalding Company to the economically-distressed town of Gloversville in upstate New York. The firm created nearly 150 jobs, helping combat severe unemployment in the area.
2) In Sanford, Maine, a $2.8-million IDB allowed NRG Barriers, Inc., a maker of roof panels, to modernize and enlarge an existing building for an expansion facility. The project created 75 new jobs.
Future Prospects
Federal authority for state and local entities to issue IDBs, which had lurched forward in short time increments for years, finally was made permanent in 1993. In later 1994, Congress slightly modified IDB eligibility to permit "facility bonds" for manufacturing projects located within federally designated empowerment zones or enterprise communities. No significant changes are expected in 1995, even as tax change legislation moves forward in Congress. A few legislative proposals would better link IDB activities to manufacturing projects being carried out in "brownfield" areas characterized by contaminated industrial sites.
Contact
The best information on the IDB process, bond-issue priorities, and possible issuing authorities is available from state or local economic development offices. The U.S. Department of the Treasury oversees and enforces program regulations, tax interpretations, and reporting requirements. For general information on the tax incentive, contact the Assistant Secretary of Treasury for Tax Policy at the Department of Treasury, 1500 Pennsylvania Avenue, N.W., Washington, D.C. 20220.
Business and Industrial (B&I) Loan Guarantees
| Objective: | To assist public, private, or cooperative organizations in rural areas to obtain loans to promote economic development. |
| Eligibility: | Any legally-recognized organization, private or public, operating in rural areas with less than 50,000 people. |
| Cost: | No application fees, although the lender may impose a one percent guarantee fee on the borrower. |
| Services: | Financial assistance in the form of loan guarantees. |
Description
The Business and Industrial (B&I) Loan Guarantee program, administered by the Rural Economic and Community Development (RECD) service within the Department of Agriculture, aims to improve the economic climate in rural areas by furthering business and industrial development. B&I assistance takes the form of loan guarantees. The RECD contracts with local organizations, which reimburse lenders for losses on loans made through this program. Guarantee levels vary according to the size of the loan — 90 percent of principal and interest for guaranteed loans of $2 million or less, 80 percent for loans between $2 million and $5 million, and 70 percent for loans between $5 million and $10 million. Any legal entity — including individuals, public and private organizations, and federally- recognized Indian tribal groups — may take part in the program.
B&I guaranteed loan funds may be used for several different purposes, including:
The RECD requires participating financiers to ensure that sufficient collateral is offered in order to redeem a guaranteed loan. All collateral must secure the entire loan. The applicant also must provide sufficient equity in the form of cash or other assets to provide reasonable assurance of a successful project; equity equal to 10 percent of the project amount is required for an existing business. The RECD requires an equity infusion of at least 20 percent for new businesses, enterprises without full personal or corporate guarantees, and energy-related businesses. Lenders also must consider the integrity and ability of project managers, the project's soundness, and the applicant's prospective earnings.
Loan maturity cannot exceed 30 years for land, buildings, and permanent fixtures; the lesser of 15 years or the useful life of machinery or equipment; and seven years for working capital. The interest rate may be either fixed or variable; it is determined between the lender and the borrower and is subject to approval by the RECD. Interest will be due at least annually after the loan is closed.
Over the past few years, the average B&I guarantee has totaled $1,030,928. Guarantees may not exceed $10 million.
Application Process
Firms interested in a B&I loan guarantee first should contact a private lender. If the private lender believes a guarantee is necessary for the loan to be viable, both the lender and the loan applicant must contact their state office of the Rural Economic and Community Development service. RECD staff will determine whether or not to approve the guarantee, based on the applicant's proposed use of loan funds, as well as the firm's financial situation. Priority is given to applications for projects in rural communities and towns of 25,000 and smaller.
Impact
In fiscal 1993, about 97 guaranteed loans were made, worth $100 million. Reflecting the program's increased appropriations, RECD state offices approved 210 guaranteed loans in fiscal 1994, valued at nearly $250 million.
Success Story
1) Residents in the town of Wahpeton, North Dakota, are developing a new use for excess wheat straw. Each year, an estimated 100 million acres of wheat are planted in the Great Plains states. The excess straw has little commercial value and presents a disposal problem in some areas. Prime Board, Inc., developed a method for using excess straw as an ingredient in panel boards. To finance its $13- million project, the company brought together different sectors of the lending community, and secured an $8.8 million B&I guarantee. The USDA Alternative Agricultural Research and Commercialization Center and the Wahpeton Community Development Corporation joined the effort when they each purchased $1 million in stock, along with the U.S. SBA and the Bank of North Dakota who provide debt capital. Though still in the development stage, Prime Board, Inc., hopes to create jobs and economic opportunity in rural Wahpeton.
Future Prospects
In fiscal 1995, the B&I loan guarantee program was authorized to obligate up to $500 million in loan guarantees. The 104th Congress increased this guarantee level by $200 million permitting RECD to guarantee up to $700 million in fiscal 1996.
Contacts
Though the first stop for individuals interested in Business and Industry loan guarantees is their local bank, manufacturers can obtain program information by contacting the Rural Economic and Community Development (RECD) service office at the U.S. Department of Agriculture, or any of the local RECD state offices. General information on the program also can be obtained through the Internet at website address: http://www.rurdev.usda.gov.
Rural Economic and Community Development Service
U.S. Department of Agriculture
Washington, D.C. 20250-0700
202-690-4730
State offices of Rural Economic and Community Development Service ALABAMA Sterling Center, Suite 601 4121 Carmichael Road Montgomery, AL 36106-3683 205-279-3400 ALASKA 634 S. Bailey, Suite 103 Palmer, Alaska 99645 907-745-2176 ARIZONA 3003 North Central Ave, Suite 900 Phoenix, Arizona 85012 602-280-8700 ARKANSAS P.O. Box 2778 Little Rock, Arkansas 72203 501-324-6281 CALIFORNIA 194 W. Main Street, Suite F Woodland, California 95695 916-668-2000 COLORADO 655 Parfet Street, Rm E-100 Lakewood, Colorado 80215 303-236-2801 CONNECTICUT 451 West Street Amherst, MA 10002 413-253-4300 DELAWARE P.O. Box 400 Camden, Delaware 19934 302-697-4300 DISTRICT OF COLUMBIA P.O. Box 400 Camden, Delaware 19934 302-697-4300 FLORIDA Federal Building P.O. Box 147010 Gainesville, Florida 32614 904-338-3400 GEORGIA 355 E. Hancock Avenue Stephens Federal Building Athens, Georgia 30610 706-546-2152 HAWAII Federal Building, Room 311 154 Waianuenue Avenue Hilo, Hawaii 96720 808-933-3000 IDAHO 3232 Elder Street Boise, Idaho 83705 208-334-1301 ILLINOIS Illini Plaza, Suite 103 1817 South Neil Street Champaign, Illinois 61820 217-398-5235 INDIANA 5975 Lakeside Boulevard Indianapolis, Indiana 46278 317-290-3100 IOWA Room 873, Federal Building 210 Walnut Street Des Moines, Iowa 50309 515-284-4663 KANSAS P.O. Box 4653 Topeka, Kansas 66604 913-271-2700 KENTUCKY 771 Corporate Plaza, Ste 200 Lexington, Kentucky 40503 606-224-7300 LOUISIANA 3727 Government Street Alexandria, Louisiana 71302 318-473-7920 MAINE P.O. Box 405 Bangor, Maine 04402-0405 207-990-9106 MARYLAND P.O. Box 400 Camden, Delaware 19934 302-697-4300 MASSACHUSETTS 451 West Street Amherst, MA 10002 413-253-4300 MICHIGAN 3001 Coolidge Road, Ste 200 East Lansing, MI 48823 517-337-6635 MINNESOTA 375 Jackson Street, #410 St. Paul, Minnesota 55101 612-290-3842 MISSISSIPPI 100 West Capitol, Suite 831 Jackson, Mississippi 39269 601-965-4316 MISSOURI 601 Business Loop, 70 West Parkade Center, Suite 235 Columbia, Missouri 65203 314-876-0976 MONTANA P.O. Box 850 Bozeman, Montana 59771 406-585-2580 NEBRASKA Room 308, Federal Building 100 Centennial Mall North Lincoln, Nebraska 68508 402-437-5551 NEVADA 1390 South Curry Street Carson City, Nevada 89703 702-887-1222 NEW HAMPSHIRE City Center, 3rd Floor 89 Main Street Montpelier, Vermont 05602 802-223-6001 NEW JERSEY 1016 Woodlane Road, Suite 22 Mt. Holly, NJ 08060 609-265-3600 NEW MEXICO 517 Gold Avenue, SW, #3414 Albuquerque, NM 87102 505-766-2462 NEW YORK 100 So. Clinton St, Rm 871 Syracuse, New York 13261 315-423-5290 NORTH CAROLINA 4405 S. Bland Road, Ste 260 Raleigh, NC 27609 919-790-2731 NORTH DAKOTA P.O. Box 1737 Bismarck, ND 58502 701-250-4781 OHIO 200 N. High Street, Room 507 Columbus, Ohio 43215 614-469-5606 OKLAHOMA USDA Agricultural Ctr. Office Bldg. Stillwater, Oklahoma 74074 405-624-4250 OREGON 1220 S.W. 3rd Avenue, Rm. 1590 Portland, Oregon 97204 503-326-2731 PENNSYLVANIA One Credit Union Pl, Ste 330 Harrisburg, PA 17110 717-782-4476 RHODE ISLAND 451 West Street Amherst, MA 10002 413-253-4300 SOUTH CAROLINA Strom Thurmond Fed Bldg 1835 Assembly St, Rm 1007 Columbia, SC 29201 803-765-5163 SOUTH DAKOTA 200 Fourth Street, S.W. Huron, South Dakota 57350 605-353-1430 TENNESSEE 3322 West End Ave, Suite 300 Nashville, Tennessee 37203 615-783-1308 TEXAS 101 S. Main, Suite 102 Temple, Texas 76501 817-774-1301 UTAH 125 South State St., Rm. 5438 Salt Lake City, Utah 84138 801-524-4063 VERMONT 89 Main Street, 3rd Floor Montpelier, Vermont 05602 802-223-6001 VIRGINIA 1606 Santa Rosa Road, Suite 238 Richmond, Virginia 23229 804-828-1550 WASHINGTON P.O. Box 2427 301 Yakima St., Room 319 Wenatchee, WA 98807 509-664-0240 WEST VIRGINIA P.O. Box 678, 75 High St. Morgantown, WV 26505 304-291-4791 WISCONSIN 4949 Kirschling Court Stevens Point, WI 54481 715-345-7625 WYOMING 100 East B Street, Room 1005 for letter mail: P.O. Box 820 Casper, Wyoming 82602 307-261-5271
Intermediary Relending Program (IRP)
| Objective: | To finance business facilities and community development projects with loans of up to $150,000. |
| Eligibility: | Ultimate recipients are private or public organizations and individuals in rural areas or cities of fewer than 25,000 people. |
| Cost: | No initial application fees. |
| Services: | Financial assistance in the form of direct loans. |
Description
The purpose of the Intermediary Relending Program (IRP) is to finance economic growth and business development in rural areas. This objective is achieved through loans made by the U.S. Department of Agriculture's Rural Economic and Community Development(RECD) service to intermediary lenders, who in turn make loans to ultimate recipients for business facilities or community development. Ultimate recipients can be private or public organizations, or individuals unable to obtain loans elsewhere at reasonable rates and terms. Intermediaries may be any RECD-approved nonprofit corporation, public agency, or cooperative. They establish revolving loan funds so that collections from loans made to ultimate recipients, in excess of operating expenses and debt payments, will be used for more loans to other recipients.
The IRP loan program encourages ultimate recipients, to the maximum extent possible, to employ low-income persons, farm families, and displaced farm families needing additional income. Loans from intermediaries to ultimate recipients must be used to establish new businesses, expand existing businesses, create employment opportunities, save existing jobs, or advance community development projects. In addition, loans to ultimate recipients may not cover more than 75 percent of the cost of the recipient's project, and may not exceed $150,000.
No loans shall be extended for a period exceeding 30 years. Principal payments on loans must be made at least annually. The initial principal payment may be deferred not more than three years. The interest rate charged to ultimate recipients is negotiated by the intermediary and the ultimate recipient. Intermediaries are encouraged to make loans at the lowest possible rate, taking into account the cost of the loan funds to the intermediary and the cost of administering the loan portfolio. An intermediary may charge a fee and use both fee and interest income for administrative costs, technical assistance to borrowers, or debt retirement. All excess income must be available for relending to eligible ultimate recipients.
Application Process
The application process for the ultimate recipients varies with each intermediary. Interested businesses first should contact their state RECD offices of the U.S. Department of Agriculture to obtain a referral to an intermediary lender in their area.
Impact
In fiscal year 1994, the Intermediary Relending Program provided $32.5 million in capital for lending. For fiscal year 1995, that number is expected to reach $100 million.
Success Story
1) In 1991, the South Delta Planning and Development District in Greenville, Mississippi, received its first IRP loan of $1.25 million. It received a subsequent loan in 1994 for $750,000. These funds have been used to create almost 300 jobs in an area with a high unemployment rate, as well as a high percentage of low-income families. Because of the relending program, the area's first child care facility has been established. IRP funds also were used to renovate and expand a rural health clinic which is making health care available to people who would otherwise not have access.
Future Prospects
The 104th Congress reduced the funds for the IRP from $85.0 million in fiscal 1995 to $37.5 million in fiscal 1996. Beyond the reduction in available funds, no programmatic changes have been proposed for this program.
Contacts
For more information and application materials, contact the Rural Economic and Community Development office of the U.S. Department of Agriculture at the number below, or the Rural Economic and Community Development state offices listed at the end of the Business and Industry Loan Program profile. General information also can be obtained on the Internet at website address: http://www.rurdev.usda.gov.
U.S. Department of Agriculture
Rural Economic and Community Development
Business and Industry Division
Washington, D.C. 20250-3221
202-690-4100
Rural Business Enterprise Grants (RBEGs)
| Objective: | To facilitate development of small and emerging private business enterprises in rural areas. |
| Eligibility: | Any private company with less than 50 employees, less than $1 million in projected gross revenue, and located in a rural area or city with a population less than 50,000. |
| Cost: | Varies with each community and type of assistance. |
| Services: | Financial assistance in the form of loans. |
Description
The U.S. Department of Agriculture's Rural Economic and Community Development (RECD) Service administers the Rural Business Enterprise Grant (RBEG) program, which provides federal grants to local governments and private non-profit corporations for the purpose of improving economic conditions in rural areas. These public bodies are able to use this money in a variety of ways, such as loans to private companies or to promote economic development in their community.
One of the primary ways in which public bodies use these grant funds is through the creation of local revolving loan programs. Manufacturers and other businesses may apply for direct loans from a local government or another non-profit participating entity if the firm's intended use of the funds will benefit the local community. The terms and conditions are determined by the lending organization and the business taking out the loan.
In addition to revolving loans, businesses may jointly request grant money from this program for public infrastructure projects, such as streets and roads, parking areas, and utility and service extensions.
Application Process
Manufacturers wishing to apply for this program should contact the economic development office of their local government. When applying for grant money under this program, local governments and other bodies must demonstrate that they already have ultimate recipients in line to receive the funds. Thus, even if a community is not currently participating in the program, a firm in the community wanting to benefit from RBEG program should discuss applying for grant funding with local government officials or relevant non-profit organizations in the area.
Impact
In fiscal 1993, the program granted a total of $20 million to establish revolving loan funds. In 1994, that amount more than doubled to $42.5 million. In 1995, the RECD service is expected to give out $50 million in Rural Business Enterprise Grants.
Success Story
1) RBEG funds were used in Cass Lake, Minnesota, to establish a revolving loan fund. The $500,000 grant, along with $50,000 of the community's own funds, are being used by the Leech Lake Tribal Council to help business located on the Indian Reservation. Area residents who hand harvest wild rice will be able to sell their produce to a reservation business, which in turn will process and market the wild rice across the United States. As the business repays the loan, the Council will relend the money to other start-up businesses on the reservation. The RBEG funds already have created 50 jobs and saved another 1,200 jobs on the reservation.
Future Prospects
Funding levels for Rural Development Enterprise Grants in fiscal 1996 remain at fiscal 1995 levels, $45.0 million. No programmatic changes have been proposed for this program.
Contacts
Applicants should contact the economic development office of their local governments for information about how to take advantage of the program. Alternatively, firms may contact their state Rural Economic and Community Development Service office. The state offices are listed at the end of the Business and Industrial Loan Guarantees Program profile. General information on program also can be obtained by contacting the Rural Business and Community Development Service office at 202-720-0813, or by accessing the following website: http://www.rurdev.usda.gov.
Several federal programs provide financing support to communities that indirectly could benefit manufacturing modernization activities. While companies do not have direct access to these initiatives, technical assistance providers could help link specific projects to local agencies and organizations administering these resources.
Community Development Block Grants (CDBG). The CDBG program, offered through the Department of Housing and Urban Development (HUD), provides grants to communities to support public facilities, infrastructure, housing, and economic development activities. At least 60 percent of all local spending must benefit low- and moderate-income persons. About 70 percent of each year's appropriation is distributed among entitlement jurisdictions (generally, cities with greater than 50,000 population), and 30 percent to states (that give grants to selected small cities with fewer than 50,000 people). In recent years, total CDBG program resources have averaged between $4 billion and $4.4 billion. While program uses vary considerably by recipient jurisdiction, typically about one-third of all program resources are devoted to economic development or public works purposes. Many jurisdictions have used CDBG funds to make loans or establish revolving loan funds that could prove useful to manufacturers needing small amounts of capital for improvement projects. Contacts: HUD at 202-708- 1577 (for entitlement jurisdictions) and 202-708-1322 (for small cities).
Section 108 Loan Guarantee Program. These guarantees enable local governments to finance physical and economic development projects too large for front-end financing with single-year CDBG allocations. The Department of Housing and Urban Development guarantees privately-underwritten debentures sold for this purpose. Contact: HUD at 202-708-1871.
EDA Public Works Grants (Title I). This program, which seeks to improve the economic base and development climate of distressed areas, is the largest within the Economic Development Administration (EDA) of the Department of Commerce. Title I funds are provided to communities to fund infrastructure and public facilities, many of which support renovation or construction of industrial parks. Typical projects include water and sewer system improvements, small business incubator facilities, and access roads or rail spurs. Contact: EDA Public Works Division at 202-482-5265.
EDA Economic Adjustment Grants (Title IX). Title IX provides assistance to communities experiencing so-called "sudden and severe" economic dislocation, such as plant or military base closings, and to communities suffering from long-term economic deterioration. Of most interest to manufacturers is EDA's ability, through Title IX, to capitalize locally-managed revolving loan funds that support business development in distressed areas. The level of financing per project tends to be small, but it is extremely flexible. Contact: EDA Economic Adjustment Division at 202-482-2659.