The REAP Guaranteed Loan Program encourages the commercial
financing of renewable energy (bioenergy, geothermal, hydrogen, solar, wind and
hydro power) and energy efficiency projects. Under the program, project
developers will work with local lenders, who in turn can apply to USDA Rural
Development for a loan guarantee up to 85 percent of the loan amount.
To assist you in determining which program best fit your
needs this comparison chart identifies the programs common and distinct
requirements in an easy to read format.
Guaranteed Loan Specifications – Loans Limits:
Loans up to 75% of the project’s cost
Maximum of $25 million, minimum of $5,000
Maximum percentage of guarantee (applies to whole loan):
85% for loan of $600,000 or less
80% for loans greater than $600,000 but $5 million or less
70% for loans greater than $5 million up to $10 million
60% for loans greater than $10 millon up to $25 millon
Fees and Interest Rates:
Lender customary interest rate, fixed or variable,
negotiated by lender and business Lender customary fees, negotiated by lender
and business
One-time guarantee fee equal to 1% of guaranteed amount
Annual renewal fee
Benefits to Businesses
Benefits include higher loan amounts, stronger loan
applications, lower interest rates and longer repayment terms that can assist
businesses that may not qualify for conventional lender financing.
Benefits to Lenders
Lender benefits include expanding lender loan portfolio,
allowing lenders to make loans above loan limits, protecting guaranteed portion
of loan against loss by the Federal Government, existing secondary market for
REAP guarantees, helping to satisfy Community Reinvestment Act (CRA)
requirements, and allowing lenders to use their own forms, loan documents, and
security instruments.
Eligible feasibility studies for renewable energy systems
include projects that will produce energy from wind, solar, biomass,
geothermal, hydro power and hydrogen-based sources. The energy to be produced
includes, heat, electricity, or fuel.
For all projects, the system must be located in a rural
area, must be technically feasible, and must be owned by the applicant.
Borrowers must be an agricultural producer or rural small
business. Agricultural producers must gain 50% or more of their gross income
from their agricultural operations. An entity is considered a small business in
accordance with the Small Business Administration (SBA) small business size
standards NAICS code.(http://www.sba.gov/size/index.html). . Most lenders are
eligible, including national and state-chartered banks, Farm Credit System
banks and savings and loan associations. Other lenders may be eligible if
approved by USDA.
Eligible project costs include: 1) post-application purchase
and installation of equipment, 2) post-application construction or
improvements, 3) energy audits or assessments, 4) permit or license fees, 5)
professional service fees, 6) feasibility studies and technical reports, 7)
business plans, 8) retrofitting, 9) construction of a new energy efficient
facility only when the facility is used for the same purpose, is approximately
the same size, and based on the energy audit will provide more energy savings
than improving an existing facility, 10) working capital, 11) land acquisition.
No comments:
Post a Comment