USDA Rural Development: Guaranteed Loan Funds Available For Renewable Energy and Energy Efficiency Projects

KELLY UTTER (715) 345-7615, ext. 122


Program Focuses on Energy Independence, Stronger Rural Economy

STEVENS POINT, WI, July 22, 2005 — USDA Rural Development announced that up to an estimated $200 million in guaranteed loan funds are now available for investments in renewable energy systems and energy efficiency improvements by agricultural producers and rural small businesses. The $200 million ($11.4 million in actual cost to the government) is part of the $22.8 million announcement made in March of 2005 by Agricultural Secretary Mike Johanns.

The new regulations released on July 18, 2005, provide guidelines for a guaranteed program that will allow eligible lenders access to government guarantees on loans for projects that develop renewable energy systems and energy efficiency improvements by agricultural producers and rural small businesses.

A significant change in the new regulation opens the application process for submittal of applications year round for the grant and guaranteed loan programs. The application processing requirements are outlined for both guaranteed loans and grants. Wisconsin Rural Development State Director Frank Frassetto stated, “The open application process will be beneficial for both the applicant and Rural Development staff, by allowing more direct assistance from Rural Development to the applicant while the project is being developed.”

The guaranteed program allows for a minimum guarantee loan of $5,000 and a maximum loan of $10 million. Loans under $600,000 can receive up to an 85% guarantee, up to 80% on loans between $600,000 and $5 million, and up to 70% on loans between $5 million and $10 million. The guaranteed program allows for an initial guarantee fee of up one percent with an annual renewal fee of up to one-half of one percent. The Fiscal Year 2005 Guaranteed Funds will be available until August 31, 2005, at which time unused funds will be allocated to the grant program and fund applications that are currently on hand and were not selected during grant application process.

Section 9006 of the 2002 Farm Bill established the Renewable Energy Systems and Energy Efficiency Improvements loan and grant program to encourage agricultural producers and small rural businesses to create renewable and energy efficient systems. The funds will be available to support a wide range of technologies encompassing biomass (including anaerobic
digesters), geothermal, hydrogen, solar, and wind energy, as well as energy efficiency improvements.

“The energy efficiency part of the program historically has been underutilized” Frassetto stated. “The new guarantee loan program will provide an additional resource for lenders to use with customers who are interested in installing energy efficient equipment or undertaking energy conservation measures to become more competitive in today’s business markets.”

“The Bush Administration has emphasized the importance of bringing greater independence to our country through expanded use of renewable energy and energy efficiency systems. Farmers and rural businesses are essential to the development of these systems, and the investments that will be made through these grants and guaranteed loans will enable them to harness and convert untapped resources on farms and fields into new resources of energy, ultimately improving the quality of life for the citizens of Wisconsin and our country,” commented Frassetto.

Frassetto encourages eligible lenders to use this program to “Invest in Rural America.” Last year USDA Rural Development awarded over $6.3 million of grant dollars to 27 agricultural producers and rural small businesses in Wisconsin; in 2003, 11 recipients were awarded more than $1.7 million.”

USDA Rural Development’s mission is to deliver programs in a way that will support increasing economic opportunity and improve the quality of life of rural residents. As a venture capital entity, Rural Development provides equity, liquidity and technical assistance to finance and foster growth in homeownership, business development, and critical community and technological infrastructure. Further information on USDA Rural Development programs is available by calling 715-345-7610 or by visiting USDA Rural Development’s web site at