Cash in on rural loans

By Dave Clark, Intuit Small Business Blog

Small town (or even no town) America, listen up: Uncle Sam has up to $150 million ready to invest in your rural business.

As part of the White House Rural Council’s “Made in Rural America” initiative, U.S. Department of Agriculture (USDA) Secretary Tom Vilsack recently announced the creation of a $150 million investment fund, which is essentially a venture capital fund to help create jobs and grow businesses in rural parts of the country.

Instead of a loan or loan guarantee, the new Rural Business Investment Program (RBIP) lets the USDA facilitate private equity investments in agriculture-related businesses by licensing Rural Business Investment Companies (RBICs), which in turn invest in rural businesses.

To qualify, David Sandretti, a director of legislative and public affairs with the USDA Rural Development office, says businesses must be located in a rural area, defined as “any area of a state not in a city or town that has a population of more than 50,000 inhabitants, according to the latest decennial census of the United States, or in the urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants, and any area that has been determined to be ‘rural in character’ by the undersecretary for rural development, or as otherwise identified in this definition.”

To be considered a small business by the USDA, generally speaking, a business must not have a net worth exceeding $6 million on the date of the financing and not have more than $2 million in net income for the preceding two years (A complete definition can be found in 13 CFR 121.201.)

Read more here.