The U.S. Department of Agriculture has unveiled new rules to expand access to capital for rural businesses, in partnership with the U.S. Treasury Department, USDA Rural Business-Cooperative Administrator Sam Rikkers said Wednesday.
“Access to capital is one of the most important needs for businesses,” Rikkers said. “USDA is partnering with the Treasury Department and other agencies to ensure that rural businesses have the resources they need to prosper and grow. The regulatory changes I am announcing will help businesses expand their operations and create jobs.”
The changes make it easier for rural businesses to qualify for loans in USDA’s Business & Industry Guaranteed Loan Program, said José Otero-García, USDA Rural Development State Director for Puerto Rico.
The new rules allow businesses to use the “New Markets Tax Credit” as a form of equity, and allow, for the first time, employees of a business to qualify for loan guarantees to purchase stock in a business by forming an Employee Stock Ownership Plan or worker cooperative.
Other improvements include: New, loan application scoring criteria, including priority for loans to businesses that will create quality jobs, such as those with health care benefits; Reduced paperwork requirements to refinance loans; Strengthened eligibility criteria for non-regulated lenders (such as privately owned finance companies) to participate in the B & I program; and expanded loan eligibility, including in urban areas, for projects that process, distribute, aggregate, store and/or market locally or regionally produced foods.
The stock ownership provisions are modeled after rural cooperative businesses. Co-ops have been economic development partners with USDA for decades. A January 2016 USDA report indicated that cooperatives earned $6.5 billion in net income and generated $246.7 billion in total revenue in 2014.
The expanded loan eligibility for projects that process, distribute, aggregate and/or market locally or regionally produced foods is part of USDA’s broader effort to support strong local and regional food systems that connect rural and urban communities.