IRP Loan

 IRP Loan

The purpose of the Intermediary Relending Program (IRP) through the USDA is to finance business facilities and community development projects in rural areas (see “Service Area” for definition). The funds must be used for community development projects, establishing new businesses and/or expanding existing businesses, creating employment opportunities and/or retaining existing jobs.

IRP Counties:  Appling, Evans, Bacon, Bulloch, Glynn, Bryan, Liberty (excluding city of Hinesville), Brantley, Long, McIntosh, Camden, Pierce, Candler, Tattnall, Charlton, Ware, Effingham, Wayne, Emmanuel

(Note: The business may not be located within the inner boundary of any city having a population of 25,000 or more)

Loan Structure (typical)
Bank: 45%
CADDA: 45%
Borrower: 10%

(The bank and CADDA have a shared 1st lien on the collateral)

Maximum/Minimum Loan Amount

The maximum loan amount is $250,000 (IRP portion).

Rate/Term

The interest rate for the loan is determined CADDA.

The term/amortization is determined by the useful life of the assets. One loan may be provided for all project assets using a “weighted average life”.

  • Land/Building (25 years)
  • Machinery/Equipment (up to 10 years)
  • Working Capital (up to 5 years)

Eligible Uses of Proceeds

  • Acquisition of land
  • Construction of new building
  • Renovation of existing structure
  • Leasehold improvements
  • Machinery & Equipment
  • Working Capital
  • Inventory
  • Pollution Control and Abatement
  • Aquaculture

Ineligible Uses of Proceeds

  • Relocation
  • Acquisition of business/Stock purchase (unless jobs are saved/created)
  • Agricultural Production

Types of Eligible Businesses

• For-Profit
• Owner must be a legal, U.S. resident

Benefits

  • Improved Loan Quality-CADDA’s participation reduces the lender’s credit risk.
  • Reasonable Interest Rates-CADDA establishes the interest rate at a rate equal to or less than the bank’s interest rate.
  • Longer Terms-CADDA’s participation may encourage longer repayment terms, which reduce the borrower’s debt service and improves operating cash flow.
  • New Customers-The IRP creates and/or retains jobs, which translates into additional customers for the private lender and new jobs for the community.
  • Low Down Payment-CADDA’s participation may reduce the down payments, thereby increasing working capital for the customer.
  • Quick Response-The loan can be closed and funded shortly after CADDA BOD approval.
  • No prepayment penalty- The borrower will pay no penalty for prepaying the loan on the IRP portion.
  • Loan Servicing Assistance-CADDA’s staff also assists the bank in servicing the loan.

Fees
CADDA may charge a loan packaging fee of one and one half (1-½%) of the IRP amount which is due at or before closing. This fee is a cost to the borrower and may be included in the loan amount.