USDA Community Facility Program Loans

• Direct Loans

  Eligible Borrowers: Public bodies, community-based non-profit corporations, and federally recognized tribes residing in rural areas (cities, towns, etc.) with no more than 20,000 residents according to the latest U.S. Census Data.

  Use of Funds: Purchase, construct, and / or improve essential community facilities, purchase equipment and pay related project expenses. Essential community facilities include healthcare and public facilities, community support, public safety, education, and utility services.

  Terms and Conditions:

  • Loan repayment terms may not be longer than: a) the useful life of the facility, b) state statutes, c) the applicant’s borrowing authority, or d) a maximum of 40 years, whichever is less.
  • There are no pre-payment penalties.
  • USDA Direct Loans are fixed rate long-term loans. The interest rates are set (and reset quarterly) by Rural Development.
  • USDA Direct Loan rates are set at the time of the issuance of the USDA loan commitment, based on the then prevailing, Rural Development USDA Direct Loan rate.

  Limitations:

  • Funding is limited to annual federal budget allocations to USDA Rural Development Community Facility Loan Programs for Direct Loans.
  • Construction loan is almost exclusively funded through a commercial bank loan or short-term construction note, though borrower may access USDA construction funding in limited circumstances.

• Guaranteed Loans

  Applicant: Federal and State chartered banks, Farm Credit Banks, Bank for Cooperatives, Savings and Loan Associations, Savings Banks, Mortgage Companies that are part of a bank-holding company, The National Rural Utilities Cooperative Finance Corporation, Credit Unions, State Bond Banks or State Bond Pools.

  Eligible borrowers: Public bodies, Indian tribes on federal and state reservations, federally recognized tribes and non-profit organizations residing in rural areas no more than 50,000 residents according to the latest U.S. Census Data.

  Use of Funds: Purchase, construct, improve and / or refinance essential community facilities. Essential community facilities include healthcare and public facilities; community support, public safety, education, and utility services.

  Terms and Conditions:

  The lender with Agency concurrence, will establish the loan term based on use of funds, useful life of the assets and borrower’s repayment ability, with a not to exceed term of 40 years.

  • There are no pre-payment penalties.
  • As of FY 2021, the maximum loan amount is $100 million of which 80% is guaranteed.
  • Interest rates are negotiated between the lender and borrower and may take the form of either fixed or variable rates.
    Fees:
    • Initial Guarantee Fee: 1.5% of guaranteed amount
    • Guarantee Retention Fee: 0.5% of outstanding principal paid annually
    • Fee for Issuance of Loan Note Guarantee Prior to Construction: 0.5%
    • Reasonable and customary fees for loan origination and negotiation between borrower and lender.

    Limitations:

    • Annual funding for the USDA Direct Loan Program is subject to yearly federal budget allocations to the USDA Rural Development Community Facility Loan Program.
    • Independent construction loans are almost universally required for the Project financing.
    • Construction loans may be financed by commercial bank loans, bank placed tax-exempt bonds and publicly sold tax-exempt and taxable bonds.

InnoVative Capital as USDA Financial Advisor

Prior to commencing the USDA process, InnoVative Capital determines client eligibility and identifies all composite funding sources to meet any shortfalls and establishes a framework to minimize financial costs.

InnoVative Capital provides fiduciary support to its clients through all phases of loan processing:

• Eligibility and Initial USDA Meeting
• Pre-Application Submission and Meetings
• USDA Public Hearing
• Feasibility Reports and Appraisal Assistance
• Application Submission and Underwriting Meetings
• Construction Lender Solicitation and Selection Process
• Project Development Process (SD/DD/CD)
• Construction Loan Negotiations and Closing
• Construction Draw Servicing 
• USDA Permanent Loan Closing and Construction Loan Refinancing