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Rural areas are any areas other than (1) A city or town that has a population of greater than 50,000 inhabitants; and (2) the urbanized area contiguous and adjacent to such a city or town, as defi ned by the U.S. Bureau of the Cen- sus using the latest decennial census of the United States. For those marine businesses fortunate to be in such rural areas, the USDA’s B&I loan program opens another door to commercial borrowers for the purchase of equipment, ma- chinery, land, buildings, supplies and other purposes consis- tent with applicable USDA regulations. The maximum loan guarantee ranges from 60% - 80%, depending on the loan amount. The maximum loan amount to one borrower can be as high as $40MM for “rural cooperatives” with a maximum of $10MM being the norm for a private enterprise. Rates may be fi xed or variable and are subject to negotiation between the borrower and lender, with USDA approval. Maximum amor- tization for real estate is 30 years, equipment and machinery is limited to useful life or 15 years, whichever is less. Working capital must be repaid in a term of no longer than seven years. In addition to the initial B&I loan guarantee fee (typi- cally 3%), an annual renewal fee is paid to the USDA by the lender to keep the guarantee in effect. he maximum fee is currently 0.50% of the outstanding principal balance as of December 31st of the previous year. It is due annu- ally on January 31st, and may vary at inception based on the amount of cost advanced in the loan; e.g. an advance rate of 70% of cost would carry a 0.35% renewal fee. WISHFUL THINKING & INTERIM HELP At some time in the future, when the importance of the United States commercial marine industry is reestablished in the halls of Congress and the offi ce of the Chief Executive, per- haps we may again have a robust marine lending and guaran- tee program available from the Department of Transportation. In the interim, viable options from the SBA and the USDA are capable of providing fi nancing support to this vital industry. On the WEB: Small Business Administration: http://www.sbagov/ content/cdc504-loan-program USDA: http://www.rurdev.usda.gov/BCP-gar.html Richard J. Paine, Sr. is the National Finance Manager - Commercial Marine Group for TCF Equipment Finance, Inc. He can be reached at rpaine@tcfef.com. The perspective offered by Mr. Paine is based on his own expertise and not necessarily the view of TCF Equipment Finance. mÜW=EPPTFOPTJRMNN cñW=EPPTF=UPTJTTUR bW=ÜÉ~ÇÑäìëÜÉê]~ÜÉ~Çí~åâKÅçã tÉÄW=ïïïK~ÜÉ~Çí~åâKÅçã +=`ÜÉãáÅ~ä=oÉëáëí~åí= +=oìëí=C=`çêêçëáçå=mêççÑ== +=lÇçê=cêÉÉ= +=aìê~ÄäÉ= +=`çãé~Åí== +=iáÖÜí=tÉáÖÜí qóéÉ=ff=pÉï~ÖÉ=qêÉ~íãÉåí=mä~åí=EpqmF rp=`ç~ëí=dì~êÇ=`ÉêíáÑáÉÇ ~åÇ=fjl=OMNM=^ééêçîÉÇ qÜÉ áë=ÅçåëíêìÅíÉÇ=çÑ=eÉ~îó d~ìÖÉ= ii= mçäóÉíÜÉäóåÉ= ìëáåÖ= íÜÉ= ãçëí ~Çî~åÅÉÇ= ëí~íÉJçÑJíÜÉJ~êí= êçí~íáçå~ä ãçäÇáåÖ=éêçÅÉëë=ÅêÉ~íáåÖ=~=ìåáí=íÜ~í=áëW +=içï=j~áåíÉå~åÅÉ www.marinelink.com MN 21 MN JAN14 Layout 18-31.indd 21 12/20/2013 10:05:20 AM
