As I have written recently, the stimulus money is creating many changes and opportunities for organizations. One of my goals is to look for ways that your organization can benefit from these changes. One of these changes has to do with USDA loans.
I recently met with BVFR & Associates, LLC to learn about an old loan program, which is getting a bit of refreshing by the stimulus plan. The stimulus plan has allocated $2 billion for loan guarantees of 60% to 90%. This safety factor allows lenders to reduce interest rates by up to 150 basis points. By guaranteeing loans up to $25 million, this program is a “hand up” not a “hand out.”
Administered by the United States Department of Agriculture (USDA) these Guarantee Loan programs reach further then the agency's name would indicate. The Nixon Administration originally funded these programs to help the economic development of "rural areas." A "rural area" is defined as any city or township with a population of less than 50,000. This definition basically includes all counties in Central Pennsylvania and most of the United States.
BVFR has facilitated over 400 loans, across the country, in the past 14 years with a USDA Guaranteed Loan. The guaranteed portion of the loan is not counted against the banks lending limit, therefore raising their ROI (return on investment). The guaranteed portion can be sold in to a secondary market, thus replenishing the lenders capital.
If you need to fund expansion, construction, start a new business, buy new equipment or refinance debt these Guarantee Loan Programs can help you. A for-profit business can increase their cash flow through the generous amortization schedules: 30 years on real estate, 15 years on equipment and 7 years on vitally needed working capital. Effective June 1st, the program is also going to allow business lines of credit to qualify. This is a huge change and will help with working capital needs.
For non-profits, authorities and municipalities there is a 40 year real estate amortization schedule. Infrastructures, new buildings, energy saving equipment upgrades are valid uses of these funds. Direct loans of up to $4 million can be mixed with Guaranteed Loans with fixed interest rates
If you would like to explore whether this program could help your organization, please contact me.
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