The trade and industry (B & I) loan program administered by the Department of YOUR of Agriculture (USDA or agency) in loan guarantees qualified lenders to help rural businesses. For eligible projects, local banks can obtain a 80% guarantee for loans up to maximum 5 million dollars, a 70% guarantee for loans of between $ 5 million and $ 10 million and a guarantee of 60% for loans of between 10 million and 25 million dollars. The B & I guaranteed loan program allows lenders to expand their loan portfolio, obtain a security deficit, increase revenue Participants in the secondary market, loans in small communities with the value of the collateral traditionally low and borrowing beyond their legal lending limits.
For each loan, lenders make a warranty claim the agency office is detailed in the State where the project. Approval or rejection of decisions usually take several weeks. Eligible projects for B & I financing include business acquisitions, purchases of commercial real estate, start-up costs and working capital, machinery and equipment and refinancing of some.
On December 17, 2008, the Department of Agriculture published an interim rule on the use of B & I loan program in the federal registry. From 1 October 2009, the new standard aims to simplify application to accelerate the approval process to ensure and expand the types of eligible projects. The Agency has finally decided to abandon the new rule and instead focus at work in the current regulatory framework to improve the B & I loan program.
Under the previous rule, the B & I Loan Program donors needed to compile applications and heavy to cope with long approval times and limited nature of the loans. For example, a common complaint lender has been the laborious process of implementation. For each loan under the previous rules, B & I lenders should submit to all locations of your subscription and the approval documents of the loan, at least three B & I application forms, draft loan agreement, copies of loan files and service policies and procedures, and details about loan history, experience and relationships with regulators. The Agency has also provided guarantees a priority of "scoring" basis, which provided loans including rural areas with a higher priority for eligible loans achieved low "rating. The decision to refuse approval of the loan or less good grades could take months from the application.
The USDA's goal to reduce these drawbacks with the revised standard. Attempts by the new rule to simplify the implementation process of origin. Lenders must apply to participate in the loan guarantee program by presenting basic information such as descriptions of the history and experience, policies and procedures and compliance documentation regulations (7 CFR 5001.9). Even if lenders had to pass this information under the rule of seniority, are now allowed to submit abstracts instead of copies of their policies and procedures (Â § 5001.9 (a) (1)). Once approved by the agency, lenders no longer have to present this information based on the application of safeguards loans (Â § 5001.9 (b) (4)). The revised standard also reduces the number of ways of implementing security (Â § 5001.12 (a)) and eliminates the loan agreement draft (Â § 5001.34). In addition to simplifying the application process, the new standard is to to reduce the timetable for approval of the guarantee.
Two changes are designed to accelerate the approval process of the security. The Agency has eliminated its "priority rating" system for a simple first-come, first served approach (Â § 5001,103 (f) (1)). In addition, the Agency has developed a program to a preferred lender (PLP) (Â § 5001.9 (d)). The benefits include the receipt of PLP in a day or refusal of approval give ten (Â § 5001.11 (c)), a small package of warranty claims (Â § 5001.12 (b)) and the ability to obtain a privileged status more than one application state with PLP (Â § 5001.9 (d) (2)). In addition to simplifying the application process, the Agency has introduced several new loan B & I loan program.
B & I guaranteed this May, to be released for other uses and purposes. Under previous rules, the Credit lines were ineligible. Credit lines are now eligible when used for annual operating / business expenses, debts advanced for the current operating cycle, provided no long-term debt borrowing crime or closing costs (Â § 5001,103 (b) (2) (XIX)). Projects involving leasehold improvements and purchase of buildings for mixed use commercial and residential are now eligible for the B & I guaranteed (Â § 5001,103 (b) (2) (xviii, xx)). Another new feature that removes the prohibition on interest rates change more frequently from quarterly, allows lenders to establish a kind variable interest rate is adjusted every day (Â § 5001.31 (a)). These new features allow lenders to obtain a beautiful B & I guarantees for projects that were not previously eligible.
Although such tools are available to financial institutions, some revisions to the rule are less clear and useful have been eliminated. For example, the Agency has replaced the criterion proposed in cash equity with a debt to tangible net worth value on the relationship criterion (Â § 5001.6 (c)), but not to define the different calculation refer to generally accepted accounting principles. Moreover, rule eliminates the limited power of the Agency for the issuance of guarantees to 90%. Again, the Agency finally decided to abandon the new rule and instead focus at work in the current regulatory framework to improve the B & I loan program.
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