FmHA FUNDS AVAILABLE
FOR RURAL PROJECTS

Farmers Home Administration has loans for water and waste disposal systems. Projects may be located in open country or in rural communities of less than 10,000 population. Funds may also be used for solid waste disposal and storm drainage systems. Some applicants may qualify for grant funds to supplement a loan.

Loans for public community facilities are available to finance health care facilities (hospitals, nursing homes or clinics) and public safety facilities (fire stations, fire trucks, ambulances, police stations and jails) in towns of up to 20,000 population. Other public facilities which are eligible include community buildings, courthouses, public maintenance buildings, libraries, schools, industrial parks, roads, bridges, airports and fairgrounds.

Applicants (public bodies and not-for-profit corporations) for water and waste disposal and community facility loans must be unable to finance the proposed project from their own resources or through commercial credit at reasonable rates and terms. Interest rates are set quarterly and are determined by the income of the area to be served. Loans are limited to 40 years or the useful life of the facility whichever is less. State laws may also limit the loan term.

Funds may be used for construction, improvements, extensions or purchase of facilities. Legal fees, architectural and engineering costs may be paid from loan proceeds. Rights-of-way acquisition and land costs are also eligible under the FmHA loan.

All loans must be adequately secured to protect the interest of the Government. Bonds, assessments or revenues will be accepted as security. A mortgage may also be taken on real and personal property where State laws permit for units of local government and not-for-profit corporations.

Local lenders may also be eligible to participate in guaranteed loans made to borrowers that operate essential community facilities in rural areas. Guarantees have been approved in Illinois for a sheltered workshop for the handicapped, and a home health care group that provides adult day care and other services to rural residents.

Rural business enterprise grant funds to finance and develop small business enterprises are available to public bodies and private nonprofit corporations serving rural areas. Funds may be used to finance utility extensions, access roads, industrial sites, equipment, water storage and other purposes. Grants may also be used to establish revolving loan funds to assist small businesses.

Loan guarantees are available to lenders for businesses in rural areas under the Business and Industry Loan Guarantee program. $10 million is the maximum loan size. Real estate loans may be guaranteed for up to 30 years, machinery and equipment up to 15 years or its useful life, and working capital up to 7 years. Collateral must be adequate to secure the entire loan. A minimum tangible balance sheet equity of 10 percent is required. New businesses must have at least 20-25 percent equity.

FmHA also has available under the Intermediary Relending Program (IRP) funds for a revolving loan fund for businesses. Loans are made at 1% interest rate for up to 30 years to nonprofit corporations and units of

Page 22 / Illinois Municipal Review / October 1992

local government. Loans to businesses are limited to $150,000. Eligible applicants under the IRP program are limited to $2,000,000.

Community program loans are administered by FmHA District Offices in Illinois located in Princeton, Morris, Galesburg, Jacksonville, Champaign, Flora, Nashville and Harrisburg. Business and Industry loan guarantees and the Intermediary Relending Program are administered by the State Office at 1817 S. Neil, Suite 103, Champaign, IL 61820.

Inquiries can be made at the FmHA District Office or by calling the State Office at 217-398-5247. •

October 1992 / Illinois Municipal Review / Page 23