Intermediary Relending Program in Alabama

Program Status:

open

Program Period:

The deadlines for completed applications to be received in the USDA Rural Development (RD) State Office for quarterly funding competitions is no later than 4:30 p.m. (local time) on: First Quarter—September 30, 2024 Second Quarter— December 31, 2024 Third Quarter— March 31, 2025 Fourth Quarter— June 30, 2025

For state specific information:

Fact Sheet

Federal Register Notice

Overview

To Apply

Other Requirements

Contact

Events

What does this program do?

This program provides 1 percent low-interest loans to local lenders or “intermediaries” that re-lend to businesses to improve economic conditions and create jobs in rural communities.

Who may apply to be an intermediary lender?

The following are eligible:

Nonprofits and cooperatives.
Federally-recognized tribes.
Public agencies.
Cooperatives

The following are eligible to apply for a loan from the intermediary lender as an ultimate recipient:

Ultimate recipients may be individuals, public or private organizations or other legal entities, given that:
- Majority ownership is held by U.S. citizens or permanent residents. (1)
- The applicant owes no delinquent debt to the Federal Government.
- The applicant is unable to obtain affordable commercial financing for the project elsewhere.
- The project is located in an eligible rural area - Check Eligibility.
- The applicant has no legal or financial interest or influence in the work of the intermediary lender.

Are there other requirements?

Intermediary lenders must have:

The legal authority to operate a Revolving Loan Fund (RLF) (2).
A record of successfully assisting rural businesses and communities, normally including experience making and servicing commercial loans.
The ability to provide adequate assurance of repayment of the loan.
Capitalization or equity sufficient to sustain its lending and business operations.
Majority outstanding interest or membership must be composed of U.S. citizens.
Intermediary and principals must have no Federal delinquent debt.
Unable to finance the fund through its own sources or other conventional financing.
The ability to close the IRP loan within six months of loan approval.
A board consisting of business and civic leaders.

How much funding is available to intermediaries?

Up to $1 million
Total outstanding debt from the IRP, to a single intermediary, may not exceed $15 million.

What are the terms for the intermediary lender?

The interest rate is fixed at 1 percent.
The maximum term is 30 years.
interest-only payments may be permitted for the first three years.
In first 6 months after closing $250,000 or greater of loan funds must be used.

What is the maximum loan amount available to ultimate recipients?

The maximum loan amount to an ultimate recipient is the lesser of $400,000 or 50% of the loan to an intermediary lender.

What are the rates, terms and payment structure on the loan to the ultimate recipient?

These are set by the intermediary lender in an amount sufficient to cover the cost of operating and sustaining the revolving loan fund.

How may funds be used?

Promote community development
Establish a new business
Establish and support microlending programs.
Create or retain employment opportunities.
To acquire, construct, convert, enlarge or repair a business or business facility, particularly when jobs will be created or retained.
To purchase or develop land (easements, rights of way, buildings, facilities, leases, materials).
To purchase equipment, machinery or supplies, or make leasehold improvements.
For start-up costs and working capital.
For pollution control and abatement.
For transportation services.
To cover feasibility studies
Professional fees, ie, architects, lawyers, engineers, accountants.
Towards the building of hotels, motels, convention centers.
For educational institutions.
For aquaculture-based rural small business.
To establish revolving lines of credit as described in 7 CFR Part 4274.314.

NOTE: ineligible loan purposes are listed in the Code of Federal Regulations 7 CFR Part 4274.319.

How can my organization become an intermediary lender?

Each year, Congress provides program funding as called for in the federal budget. If you are interested in becoming a Revolving Loan Fund lender through the Intermediary Relending Program, you are encouraged to contact a USDA Rural Development local office.

What is an eligible area?

Any area, including a city or town, that has a population of fewer than 50,000 residents.
Any urbanized areas contiguous and adjacent to a city or town of 50,000 or more residents may not be eligible.
The intermediary borrower’s headquarters may be based within a larger city so long as the project service area is located in an eligible rural area.
The intermediary lender may be located anywhere.

Check eligible addresses for Business Programs

How do we get started?

Please reach out to your state office for additional information and to apply for the Intermediary Relending Program.

Who can answer questions?

You can contact an Intermediary Relending Program lender serving your area. You may also contact your local office for assistance.

What law governs this program?

The Basic Program is governed by the Code of Federal Regulations, 7 CFR Part 4274.
The Loan Servicing is governed by 7 CFR Part 1951.
This program was originally authorized by the Food Security Act of 1985, Pub L. 99-198 (1985 Farm Bill).

Why does USDA Rural Development do this?

The purpose of the Intermediary Relending Program is to alleviate poverty and increase economic activity and employment in rural communities, especially disadvantaged and remote communities. Under this program, loans are provided to local organizations (intermediaries) for the establishment of revolving loan funds for the purpose of providing loans to ultimate recipients to promote community development, establish new businesses, establish and support microlending programs and create or retain employment opportunities in rural areas..

Intermediary lenders are encouraged to complement state and regional strategies, and partner with other public and private organizations that can provide complementary resources.

NOTE: Because citations and other information may be subject to change, please always consult the program Instructions listed in the section above titled ”What law governs this program?” You may also contact your local office for assistance.

(1) Individual borrowers must be citizens of the United States (U.S.) or reside in the U.S. after being legally admitted for permanent residence. Corporations or other non-public borrowers must be at least 51 percent owned by persons who are either citizens of the U.S. or reside in the U.S. after being legally admitted for permanent residence.

(2) A revolving loan fund (RLF) is a pool of public- and private-sector funds that recycles money as loans are repaid (revolved funds). USDA grants or loans may be used to start, replenish and expand RLFs. Eligible intermediary recipients are state or local government agencies and nonprofit entities structured to make loans. They must demonstrate economic need and have a plan that both meets program requirements and spurs growth.

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Intermediary Relending Program in Alabama