# Presentation: 683645

## USDA Rural Economic Development Loan and Grant Program (REDLG)January 14, 2008Oklahoma City, OklahomaWilliam F. Hagy IIIDeputy Administrator, Business ProgramsUSDA Rural Development

## Overview

Brief History
Eligible entities/purposes
Funding Mechanisms                                       
Historical Funding Perspective
New Regulations
Marketing of Program

*Brief History*
*Eligible entities/purposes*
*Funding Mechanisms                                       *
*Historical Funding Perspective*
*New Regulations*
*Marketing of Program*

## Brief History of REDLG

Final Rule implementing REDLG program was published February 15, 1989 
Administered by REA until FY 94
Administered by RBS since FY 94

*Final Rule implementing REDLG program was published February 15, 1989 *
*Administered by REA until FY 94*
*Administered by RBS since FY 94*

## Rural Economic Development 
Loans & Grants (REDLG)

Eligibility:  An organization is eligible to apply for REDLG funding if it can be described as:

Any former Rural Utility Service (RUS) borrower that has repaid or prepaid an insured, direct, or guaranteed loan under the Rural Electrification Act,
any not-for-profit utility that is eligible to receive an insured or direct loan under such Act or,
any borrower currently in debt under such Act.

Purpose:  Revolving loan programs, community development, technical assistance, construction, capital improvements, purchase of machinery and equipment, and working capital.

*Loans & Grants (REDLG)*
*Eligibility:  An organization is eligible to apply for REDLG funding if it can be described as:*
*Any former Rural Utility Service (RUS) borrower that has repaid or prepaid an insured, direct, or guaranteed loan under the Rural Electrification Act,*
*any not-for-profit utility that is eligible to receive an insured or direct loan under such Act or,*
*any borrower currently in debt under such Act.*
*Purpose:  Revolving loan programs, community development, technical assistance, construction, capital improvements, purchase of machinery and equipment, and working capital.*

## How REDLG is Funded

Cushion of Credit 
Electric Underwriting Program 

*Cushion of Credit *
*Electric Underwriting Program *

## REDLG Earrings/Obligations
FY 02 – 07
				Electric
		Cushion of	Underwriting
FY		Credit		Program		REDL Obligation	REDG Obligation

2002		18,781,606	0		14,966,88	7	 2,620,000	
2003		35,939,626	0		14,869,939	 4,066,300
2004		71,628,275	0		14,704,169              10,786,000
2005		89,106,402	   429,041		24,302,375               8,120,000	
2006		69,718,134	4,945,479		25,110,309             10,000,000	
2007		37,475,627	6,644,363		26,167,000	9,963,333
Total	   322,649,270             12,018,883	              120,120,679             45,555,633

*FY 02 – 07*
*	**	**	**	**Electric*
*	**	**Cushion of**	**Underwriting*
*FY**	**	**Credit**	**	**Program**	**	**REDL Obligation**	**REDG Obligation*
*2002**	**	**18,781,606**	**0**	**	**14,966,88**	**7**	** 2,620,000**	*
*2003**	**	**35,939,626**	**0**	**	**14,869,939**	** 4,066,300*
*2004**	**	**71,628,275**	**0**	**	**14,704,169              10,786,000*
*2005**	**	**89,106,402**	**   429,041**	**	**24,302,375               8,120,000**	*
*2006**	**	**69,718,134**	**4,945,479**	**	**25,110,309             10,000,000**	*
*2007**	**	*_*37,475,627*_*	*_*6,644,363*__*	*_*	*_*26,167,000*_*	*_*9,963,333*_
*Total**	**   322,649,270             12,018,883**	**              120,120,679             45,555,633*

## Rural Economic Development Loan and Grant Program 
Funding History FY 01 – 07 

			RED Loans			RED Grants
FY		No.	Amount		No.	Amount
2001		66	$22.6M		16	$2.96M
2002		42	$15.0M		15	$2.6M
2003		43	$14.9M		22	$4.2M
2004		41	$14.7M		13	$10.8M
2005		52	$24.3M		31	$8.1M
2006		46	$25.1M		36	$10.0M
2007		44	$26.2M		37	$9.96M
Totals	          334	$142.8M	          170	$48.62M

*Funding History FY 01 – 07 *
*	**	**	**RED Loans**	**	**	**RED Grants*
*FY**	**	**No.**	**Amount**	**	**No.**	**Amount*
*2001**	**	**66**	**$22.6M**	**	**16**	**$2.96M*
*2002**	**	**42**	**$15.0M**	**	**15**	**$2.6M*
*2003**	**	**43**	**$14.9M**	**	**22**	**$4.2M*
*2004**	**	**41**	**$14.7M**	**	**13**	**$10.8M*
*2005**	**	**52**	**$24.3M**	**	**31**	**$8.1M*
*2006**	**	**46**	**$25.1M**	**	**36**	**$10.0M*
*2007**	**	*_*44*_*	*_*$26.2M*_*	**	*_*37*_*	*_*$9.96M*_
*Totals**	**          334**	**$142.8M**	**          170**	**$48.62M*

## Rural Economic Development Loan Program  FY 2007

- Total Loans: 44

- Total Funds: $26,167,000

-   $1,000 - $2,999

- >$3,000

- MA

- ME

-   RI

- CT

- MD

- VT

- NH

- PR

- HI

- AK

- VA 2

-  WV

- NC

- SC 7

- TN 5

- KY 4

- OH

- IN

- MI 1

- NY

- PA 1

- GA
-   2

-   AL

- MS

- FL

- LA

- IL 1

- MO 2

- IA 4

- WI 1

- MN 1

- AR

- MT

- ND

- SD 2

- NE 1

- KS 8

- OK 1

- TX

- WY

- CO 1

- NM

- ID

- OR

- CA

- NV

- UT

- AZ

- WA

- DE

- NJ

- VI

**Rural Economic Development Loan Program  FY 2007**

- In Thousands

- As of September 30, 2007

- WP

-    $0 - $199

-  $200 - $999

## Rural Economic Development Loan ProgramCaseload As of September 30, 2007

-   MA

- RI

- CT

- MD

- VT

- NH

- PR

- VA 5

- NC 16

- SC 12

- TN 35

- OH 3

- IN
-  8

- MI 8

- PA 4

- GA 14

- AL 18

- MS
- 18

- FL
-   4

- LA
-   2

-   IL 2

- MO 14

- IA  48

- WI 17

-  MN
-   76

-  AR 6

- MT 21

- ND 20

- SD 21

- NE 9

- OK 12

- TX 2

- WY 3

- CO 2

- NM 6

- ID

- OR 1

-  CA

-    NV

- UT

- AZ

- WA

- DE

- NJ

- VI

**Rural Economic Development Loan Program****Caseload As of September 30, 2007**

- WP

- $0

- $1 - $999,999

- $1M - $2,999,999

- $3M - $5,999,999

- $6M - $8,999,999

- $9M - $20,000,000

- AK

- HI

- KY 23

**Total Cases:  499**

**Outstanding Portfolio:  $191,969,677**

-  ME 1

- 1

- WV

- KS 66

- >$20,000,000

- NY 1

## Rural Economic Development Grant Program  FY 2007

- Total Grants: 37

- Total Funds: $9,963,333

-   $300 - $599

- $600 - $999

- MA

- ME

-   RI

- CT

- MD

- VT

- NH

- PR

- HI 1

- AK

- VA

-  WV

- NC 1

- SC 2

- TN 1

- KY 1

- OH

- IN

- MI

- NY

- PA

- GA

-   AL 1

- MS

- FL

- LA

- IL

- MO 1

- IA 13

- WI

- MN 3

- AR

- MT 1

- ND

- SD 2

- NE 3

- KS 4

- OK 1

- TX

- WY

- CO 1

- NM

- ID

- OR 1

- CA

- NV

- UT

- AZ

- WA

- DE

- NJ

- VI

**Rural Economic Development Grant Program  FY 2007**

- In Thousands

- As of September 30, 2007

- WP

- $0 - $99

- $100 - $299

- >$1000

## Rural Economic Development Grant Program Caseload As of September 30, 2007

- MA

- RI

- CT

- MD

- VT

- NH 1

- PR

- VA 3

- NC 18

- SC 5

- TN 13

- OH 2

- IN
- 2

- MI 3

- NY

- PA 2

- GA
-   4

- AL 21

- MS
-   2

- FL
-  5

- LA

- IL 5

- MO 10

- IA 108

- WI 15

-  MN
-    49

- AR 1

- MT 2

- ND 13

- SD 32

- NE  8

- KS 24

- OK 7

- TX 2

- WY 3

- CO  3

- NM 4

- ID

- OR 1

- CA

-  CA

- NV

- UT

- AZ

- WA 2

- DE

- NJ

- VI

**Rural Economic Development Grant Program ****Caseload As of September 30, 2007**

- WP

- $0

- $1 - $999,999

- $1M - $1,999,999

-   $2M - $3,999,999

- >$4M - $8,999,999

- >$9,000,000

- AK

- HI 2

- KY 7

- 1

**Total Cases:  380**

**Outstanding Portfolio:  $109,321,888**

- ME

- WV

## 4280-A Rural Economic Development 
Loan and Grant Program

New RD Instructions, 4280-A replace the old, 1703-B, 
Website: http://www.rurdev.usda.gov/regs/regs/pdf/4280a.pdf

Scope:  Program Administration, application processing, 
            disbursement, monitoring, and reporting

*Loan and Grant Program*
*New RD Instructions, 4280-A replace the old, 1703-B, *
*Website: http://www.rurdev.usda.gov/regs/regs/pdf/4280a.pdf*
*Scope:  Program Administration, application processing, *
*            **disbursement, monitoring, and reporting*

## Highlights of Changes from the Old Regulations to the New

Listing of definitions as used in Subpart 4280-A

“RUS Borrower” is now referred to as the “Intermediary”
The Rural Development plan is replaced with the Revolving Loan Fund Plan.

*Listing of definitions as used in Subpart 4280-A*
*“**RUS Borrower” is now referred to as the “Intermediary”*
*The Rural Development plan is replaced with the Revolving Loan Fund Plan.*

## Highlights of Changes

REDLG Projects must be located in a Rural Area

Definition of Rural Area:  

	New Definition – Any area other than a city or town that has a population of greater than 50,000 inhabitants and the urbanized area contiguous and adjacent to such city or town.

	Old Definition – Any area not included within boundaries of any urban area as defined by the Bureau of the Census.

Interest rates on Ultimate Recipient loans funded with revolved funds will be at the discretion of the intermediary as shown in the RLF Plan, but not to exceed the prevailing prime rate.

*REDLG Projects must be located in a *_*Rural Area*_
*Definition of Rural Area:  *
*	*_*New Definition*_* – Any area other than a city or town that has a population of greater than 50,000 inhabitants and the urbanized area contiguous and adjacent to such city or town.*
*	*
*	*_*Old Definition*_* – Any area not included within boundaries of any urban area as defined by the Bureau of the Census.*
*Interest rates on Ultimate Recipient loans funded with revolved funds will be at the discretion of the intermediary as shown in the RLF Plan, but not to exceed the prevailing prime rate.*

## Highlights of Changes

Agricultural production is an eligible purpose only where the
project:

Benefits farmer-owned cooperatives or a similar farmer-owned organization
The agricultural production portion of the loan will not exceed 50% of the loan amount

_*Agricultural production*_* is an eligible purpose only where the*
*project:*
*Benefits farmer-owned cooperatives or a similar farmer-owned organization*
*The agricultural production portion of the loan will not exceed 50% of the loan amount*

## Highlights of Changes

Loan Fund Usage:   Intermediary must loan funds to ultimate recipient within one year
Maximum Loan Term:  Maximum of 10 years including principal deferent period
To provide consistency with other Agency programs, “Letter of Agreement” is now referred to as the “Letter of Conditions.”
Supplemental Contribution:  Provides option for Intermediary to use supplemental contributions for same project or separate eligible project within 3 years

*Loan Fund Usage:   Intermediary must loan funds to ultimate recipient within *_*one year*_
*Maximum Loan Term:  Maximum of 10 years including principal deferent period*
*To provide consistency with other Agency programs, “Letter of Agreement” is now referred to as the “Letter of Conditions.”*
*Supplemental Contribution:  Provides option for Intermediary to use supplemental contributions for same project *_*or*_* separate eligible project within 3 years*

## Highlights of Changes

Principal Deferment Period:  Upon request by intermediary, a one year deferment will automatically be granted for established projects and two years for start-up ventures or community facilities projects.

Limitation of Number of Awards Annually:  Depending on the amount of funds available, the Agency may publish an announcement limiting an Intermediary to one selected Grant application and two selected loan applications in a fiscal year

*Principal Deferment Period:  Upon request by intermediary, a one year deferment will automatically be granted for established projects and two years for start-up ventures or community facilities projects.*
*Limitation of Number of Awards Annually:  Depending on the amount of funds available, the Agency may publish an announcement limiting an Intermediary to one selected Grant application and two selected loan applications in a fiscal year*

## Highlights of Changes

Completely new application evaluation and scoring criteria

*Completely new application evaluation and scoring criteria*

## Marketing of Program

RUS/RBS Collaboration
Field Office Training
Success Stories

*RUS/RBS Collaboration*
*Field Office Training*
*Success Stories*

## REDL, “Best Practices - Iowa”

$400,000 REDL to Iowa Electric Cooperative.
Pass through loan to an LLC to assist financing of 40 mgy ethanol plant.
Operational in April 2004

*$400,000 REDL to Iowa Electric Cooperative.*
*Pass through loan to an LLC to assist financing of 40 mgy ethanol plant.*
*Operational in April 2004*

## REDL, “Best Practices - Iowa”

Co-Line Welding, Inc. 

$450,000 loan funds to provide grants to RUS borrowers to provide economic development.

15 jobs were created and 70 jobs were saved. 

*Co-Line Welding, Inc. *
*$450,000 loan funds to provide grants to RUS borrowers to provide economic development.*
*15 jobs were created and 70 jobs were saved. *

## REDL, “Best Practices - Kentucy”

P.J. Murphy Forest Products Corporation 

 $250,000 loan funding was used to purchase new equipment for animal bedding facility.

The facility created 8 jobs.  Indirectly 7 jobs will be created through transportation of raw materials.

*P.J. Murphy Forest Products Corporation *
* **$250,000 loan funding was used to purchase new equipment for animal bedding facility.*
*The facility created 8 jobs.  Indirectly 7 jobs will be created through transportation of raw materials.*

## REDL, “Best Practices - Kansas”

Clasen Inc. is a grocery store serving 3,000 residents. 

The store will provide a deli , flower shop, and catering services.

$450,000 will be used for expansion.

10 new jobs will be created.   

*Clasen Inc. is a grocery store serving 3,000 residents. *
*The store will provide a deli , flower shop, and catering services.*
*$450,000 will be used for expansion.*
*10 new jobs will be created.   *

## REDL, “Best Practices - Oklahoma”

The Northpark Professional Center project lies within Caddo County, which is one of our fourteen targeted poverty counties. 
$352, 000 REDL funds were used to assist with remodeling of facility. 

3 jobs was created with 30 jobs indirectly created in a town with a population of 6,600. 

*The Northpark Professional Center project lies within Caddo County, which is one of our fourteen targeted poverty counties**. *
*$352, 000 REDL funds were used to assist with remodeling of facility. *
*3 jobs was created with 30 jobs indirectly created in a town with a population of 6,600. *

## REDL, “Best Practices – South Dakota”

The Artesian /Lectcher School District Project needed funding for construction of K-12 school building.

$450,000 loan funds resulted in 55 jobs.  

*The Artesian /Lectcher School District Project needed funding for construction of K-12 school building.*
*$450,000 loan funds resulted in 55 jobs.*

## QUESTIONS