USDA implements OneRD guarantee loan initiative

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The USDA announced the implementation of the agency’s OneRD Guaranteed Loan Initiative on Aug. 31 and released new information on interest rates and terms that will help lenders apply for loan guarantees to support rural businesses, infrastructure and community facilities.

The agency released a final ruling on the initiative on July 13, stating that the program is designed to make it easier for lenders to access four guaranteed loan programs, including the Rural Energy Program for America, the Water and Waste Guarantee Loan Program, and the Guaranteed Loan Program Community Facility Loan Program and the Guaranteed Business and Industry Loan Program.

The REAP program is of particular interest to those working in the biofuel and bioenergy industries. It grants loan guarantees and grants to agricultural producers and small rural businesses for renewable energy systems or for improving energy efficiency. Solid biomass, biogas and biofuel projects are among the renewable energy systems eligible for the program.

As part of the OneRD Guarantee Loan Initiative, the USDA has stated that it will standardize the requirements for credit reviews, loan processing, loan disbursements, and loss claims. The agency said these measures will make the application process easier and faster for lenders. The changes include a common credit guarantee application and common forms that lenders can use in all four programs.

In July, the agency also announced that it would issue promissory note guarantees to lenders within 48 hours of submitting documentation demonstrating compliance with the terms of the conditional commitment. The USDA will also provide guarantee percentages and fee requirements to lenders through a single annual notice at the beginning of each fiscal year and allow lenders to obtain loan guarantee approval prior to any construction project. The agency will also grant automatic approval to reputable lenders that are overseen or created by state or federal regulators to participate in all four programs, while unregulated lenders can apply for approval to participate through a single certification process that is valid 5 years.

In the announcement released on Aug. 31, the USDA said it will provide guarantee percentages, annual fees, recurring retention fees, and optional construction fees prior to fiscal 2021 to assist lenders in applying for the four affected loan guarantee programs.

For the REAP program, the fee for the loan guarantee is 1 percent, the fee for regular guarantee retention is 0.25 percent, the percentage for the loan guarantee is 80 percent, and the fee for issuing the promissory note guarantee prior to construction is 0.5 percent. The fees included in the notice come into effect on October 1st.

Please visit the USDA website for more information.

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