The USDA's Business & Industry (B&I) loan program is designed to improve business, industry, employment and the overall economic and environmental climate in rural communities. In an effort to ease the credit crunch on "Main Street", the American Recovery and Reinvestment Act (ARRA) aims to boost the existing B&I program to encourage lenders to participate.
ARRA provides for several B&I program enhancements, which are available through September 30, 2010:
o $1.7 billion of new rural business lending can be guaranteed. This is in addition to the 2010 budget amount and equal to approximately double the level of past annual B&I activity.
o B&I-ARRA funding will be approved as requested from a central pool at the National Office to avoid potentially inadequate state allocations of the funds.
o The B&I guarantee fee is reduced from 2% to 1%.
o The annual renewal fee of ¼% is eliminated.
o 90% guarantees are available on "high priority loans" up to $10 million
cash loan without a bank account, fast cash loan, no credit cash loans,
"High priority loans," which are eligible for a 90% guarantee, score at least 55
points under the B&I scoring system. Generally speaking, a loan is considered "high priority" if it provides "quality jobs" and is in a "distressed community":
o A business provides "quality jobs" if it meets one of the following criteria:
o Pays an average wage rate that exceeds 125% of the Federal Minimum Wage or at least $9.07 per hour.
o Qualifies under the Work Opportunity Tax Credit Program
o Offers healthcare benefits package to all employees, with at least 50% of the premium paid by the employer
o A business is considered to be in a "distressed community" if the area experiences any of the following:
o Outmigration: Population loss each decade for the past 40 years
o Persistent poverty: 20% poverty rate or more for the past 30 years
o High unemployment: Greater than 125% of the national unemployment rate
o Underserved area or underrepresented group: Area that has historically not benefited from B&I assistance or a minority- or women-owned business
If a business is not in a distressed community and/or does not provide quality jobs, the project may still be eligible for B&I-ARRA funding with less than a 90% guarantee.
Along with the benefits, B&I-ARRA funding brings additional requirements:
o Buy American: Projects for the construction, alteration, maintenance or repair of a public building or public work must use American iron, steel and manufactured goods
o Vehicles: Any vehicles financed must be manufactured in the U.S.
o Davis Bacon Act: For loans in which more than $2,000 will be spent for construction, alteration or repair, laborers and mechanics must be paid prevailing wages in accordance with Davis Bacon Act
o Ineligible Projects:
o Zoos
o Aquariums
o Convenience stores (unless creating quality jobs and sells E85 fuel upon completion)
o Pools
o Water parks
o Hotels/motels with pools/water parks
o Golf courses
o Museums
o Casinos or other gambling establishments
Aside from these restrictions, the program works just like the original B&I guaranteed
loan program. Furthermore, any project that complies with B&I standards but does not meet the additional ARRA requirements may still be approved as a regular B&I loan at the state level.
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