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INTERMEDIARY RELENDING PROGRAM
The purpose of
the Intermediary Relending Program (IRP) is to finance business
facilities and community development projects in rural areas. This is
achieved through loans made by the Rural Business-Cooperative Service
(RBS) to intermediaries. Intermediaries re-lend funds to ultimate
recipients for business facilities or community development.
Intermediaries establish revolving loan funds so collections from loans
made to ultimate recipients in excess of necessary operating expenses
and debt payments will be used for more loans to ultimate
recipients.
Who May Borrow? Intermediaries
may be private non-profit corporations, public agencies, Indian groups,
or cooperatives. Intermediaries must:
- Have legal authority to carry out the proposed loan purposes and
to incur and repay the debt.
- Have a record of successfully assisting rural business and
industry, normally including experience in making and servicing
commercial loans.
- Provide adequate assurance of repayment.
Ultimate
recipients may be private or public organizations or
individuals.
At least 51 percent of the owners or members of both
intermediaries and ultimate recipients must be United States citizens or
admitted for permanent residency. Both intermediaries and ultimate
recipients must be unable to obtain the proposed loan elsewhere at
reasonable rates and terms.
How May Funds Be
Used? All of the IRP loan funds received by an intermediary
must be reloaned to ultimate recipients. Interest income and fees may be
used for administrative costs, technical assistance to borrowers, or
debt retirement. All collections from the operation of the IRP revolving
loan fund that are not used for the above authorized expenses must be
made available for relending to eligible ultimate
recipients.
Loans from intermediaries to ultimate recipients must
be for the establishment of new businesses, the expansion of existing
businesses, creation of employment opportunities, saving of existing
jobs, or community development projects.
What are the
Loan Terms? Loans to intermediaries are scheduled for
repayment over a period of up to 30 years. The term of loans from
intermediaries to ultimate recipients is set by the
intermediary.
What is the Interest Rate? The
interest rate on loans to intermediaries is 1 percent per annum. The
interest rate charged to ultimate recipients is negotiated by the
intermediary and the ultimate recipient.
Is Collateral
Required? Yes. All loans to intermediaries must be
adequately secured. Security normally consists of a lien on the IRP
revolving fund. Intermediaries are also required to obtain RBS approval
for their security policies for loans to ultimate
recipients.
If Ultimate Recipients Fail to Repay Loans
from the Intermediary, what happens to the Intermediary's Loan from
RBS? When the intermediary accepts the IRP loan, it is
incurring a debt. Collections from loans to ultimate recipients should
be sufficient to repay the RBS loan on schedule. However, even if
collections from ultimate recipients are not sufficient, the
intermediary is fully responsible for repaying RBS.
Where
Should Applications be Filed? Complete applications should
be sent to the USDA Rural Development State Office for the State where
the applicant is located.
What Should Be Included for a Complete Application? Anyone interested in applying for an IRP loan
should obtain a copy of the IRP regulations (RD Instruction 4274-D)
from the RBS National Office or any USDA Rural Development State Office.
The regulations contain detailed instructions for completing an
application. [Forms] [Regulations]
Where can Additional Material be
Obtained? Additional information, copies of the regulations,
and forms may be obtained by contacting any USDA, Rural Development
State Office (check your telephone directory under "Federal Government")
or by writing to the RBS National Office at the following:
USDA, Rural Business-Cooperative Service 1400 Independence
Avenue, SW Room 5050 South Building Washington DC 20250 Phone:
(202) 720-1400
We recommend discussing the proposed project and process with your local State or area office before completing the application.
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