Q: What are the eligible uses for a OneRD guaranteed loan?
Q: What are the loan requirements for a loan guarantee under this initiative?
- The lender participating in programs under the initiative has the responsibility to submit applications for quality loans that are underwritten with generally accepted prudent lending practices for commercial, public and project financing. The lender will determine the loan term, interest rate, and collateral requirements, though these must be approved by the Agency. .
Q: What Collateral Is Required?
- Collateral must have documented value sufficient to protect the interest of the lender and the Agency. Lenders will discount collateral consistent with sound loan-to-value policy with the discounted collateral value at least equal to the loan amount. The lender must provide satisfactory justification of the discounts being used. Hazard insurance is required on collateral (equal to the loan amount or depreciated replacement value, whichever is less).
Q: Can programs under the OneRD Guarantee Loan Initiative be used to finance construction?
- Yes. All programs under the initiative may issue a loan note guarantee prior to completion for projects that demonstrate use of approved technologies. The lender filing the application must adequately mitigate project-risk by meeting requirements as listed in Section 5001.205 (e) (2) of the regulation. If the Agency approves the lender's proposal to provide the loan note guarantee prior to completion, the loan must identify payments required during the construction period and convert to permanent financing. The loan must not include a balloon payment.
Q: What amount of equity is required for nre businesses and existing businesses?
- All borrowers are required to have sufficient capital or equity to mitigate the ongoing financial and operational risks of the business. Only REAP loans require a minimum of 25% of total project costs from other funding be placed into the project.
Q: Are there feasibility study requirements?
- The OneRD Guarantee Loan Initiative provides discretion and flexibility based on the complexity of the project in addition to the loan amount. Lenders may provide adequate discussion of project risks in the credit evaluation or in other application documents which may negate the need for an independent feasibility study.
- For B&I loans more than $1 million, the Agency has discretion in the scope of the feasibility study based on the complexity of the new business operation and the history of the borrower. The Agency may also reduce the scope of the feasibility study if the lender's analysis provided sufficient information and analysis regarding the technical and economic feasibility that would be contained in an independent feasibility study.
Q: What fees are associated with the OneRD Guarantee Loan Initiative?
- All programs have an initial guarantee fee that is published annually in a Federal Register notice. Additional fees, such as a periodic guarantee retention fee, will also be published annually.
Q: What is the maximum amount of a loan guarantee for is programs under the initiative?
- The loan guarantee percentage for programs under the initiative is published annually in a Federal Register notice. According to this year’s annual notice, loans approved in Fiscal Year 2021 will receive an 80 percent guarantee regardless of the loan size.