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Bi Loan Guarantee Public 

 

 
 
Tags:  citi  credit 
Views:  235
Published:  December 13, 2011
 
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Slide 1: BUSINESS AND INDUSTRY GUARANTEED LOAN PROGRAM USDA Rural Business-Cooperative Service
Slide 2: THE B&I PROGRAM • Improve, develop, or finance business, industry, and employment, and improve the economic and environmental climate in rural communities. • Bolster the existing private credit structure through the guarantee of quality loans that will provide lasting community benefits.
Slide 3: ELIGIBLE LENDERS • Any Federal or State chartered and regulated lender. Including: • Commercial Banks • Savings and Loan • Credit Unions • Farm Credit
Slide 4: LOAN GUARANTEE LIMITS • $0 - $5 Million • $5 Million - $10 Million • $10 Million - $25 Million 80% Guarantee 70% Guarantee 60% Guarantee
Slide 5: COST OF THE PROGRAM Guarantee Fee – • 2% of the Guaranteed Portion of the original Loan Amount. • Due at Loan Closing. Lender’s Annual Renewal Fee – • ¼% of the Guaranteed Portion of the remaining balance. • Due every January 31st.
Slide 6: BORROWER ELIGIBILITY • Any Corporation, Partnership, Sole Proprietor, Co-op, LLC, Indian Tribe, Public Body engaged in a business. • Organized either on a for profit or nonprofit basis. • In a rural area - not within the boundaries of a city of 50,000 or more, or located in adjacent urbanized areas. • 51 percent owned by U.S. Citizens or persons admitted for permanent residence.
Slide 7: INELIGIBLE BORROWERS • Charitable institutions. • Churches or church-controlled organizations. • Fraternal organizations. • Lending and investment institutions. • Insurance companies. • Businesses engaged in illegal activity.
Slide 8: INELIGIBLE BORROWERS • Golf Courses and Race Tracks. • Owner-occupied housing. • Businesses with Government employees or military personnel as directors, officers, or owners (20 percent or more control). • Businesses with more than 10 percent of gross revenue from gambling.
Slide 9: ELIGIBLE LOAN PURPOSES • Acquire Land and Buildings used for business. • New construction and improvements. • Machinery and equipment purchases. • Inventory or working capital. • Favorable debt refinancing or business acquisitions. • Start a new business.
Slide 10: INELIGIBLE LOAN PURPOSES • Lines of credit. • Lease payments. • Payment of delinquent obligations. • Distribution or payment to an owner, beneficiary, or a close relative.
Slide 11: INELIGIBLE LOAN PURPOSES • Relocation of jobs outside their existing community. • Agriculture production that is not integrated with processing - other exceptions. • Loans with direct or indirect conflicts of interest. • Collateralize other obligations.
Slide 12: LOAN TERMS • Maximum repayment terms for: – Real estate - 30 years. – Machinery and equipment - the lesser of 15 years or its useful life. – Working capital - 7 years. • No balloon payments allowed.
Slide 13: COLLATERAL • Sound and sufficient to protect interests of the Lender and Agency. • Appropriately discounted to reflect recovery values. • Junior liens can be considered. • Must have same collateral for the guaranteed and non-guaranteed portions.
Slide 14: EQUITY BASED ON GAAP Tangible Balance Sheet Equity – • Minimum of 10 percent for existing businesses. • Minimum of 20 percent for new businesses. • Will require more for riskier or specialized businesses. Intangibles – such as goodwill, organizational costs, loan fees, patents, trademarks, and R&D are not included.
Slide 15: CREDIT ANALYSIS Lender analysis • Address borrower’s management ability, repayment ability, credit history, location, competition, personal guarantees, collateral and other important aspects. • Financial Statements - past 3 years historic and 2 years of projections supported by a feasible business plan. • Compile ratios and compare to industry standards.
Slide 16: ISSUING THE GUARANTEE Lender certification • No material adverse changes in borrower’s condition. • All conditions of the Commitment have been met - equity, insurance, personal guarantees, liens perfected, etc. • Loan has been properly closed. • Settlement Statement.

   
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