U.S. Department Of Agriculture Loan Guarantee Programs And Utilization Of Bond Financing


On April 16, 2010, the United States Department of Agriculture (USDA) issued a proposed rule for its Biorefinery Assistance Loan Guarantee Program (the 9003 Program) and invited industry stakeholders to submit public comments on this proposed rule through June 15, 2010. Under the 9003 Program, USDA is authorized to guarantee loans of up to $250 million for the development and construction of commercial scale biorefineries in rural areas that produce advanced biofuels.

Although USDA is authorized to provide a significant amount of financial assistance for the development of renewable energy projects under the 9003 Program, as well as the Rural Energy for America Loan Guarantee Program (REAP) and the Business and Industry Loan Guarantee Program (the B&I Program), illiquidity and risk aversion in the commercial bank lending market has precluded many project developers from accessing these programs. In contrast to the Department of Energy’s (DOE’s) Innovative Technology Loan Guarantee Program, in which a project developer may apply directly to DOE for a loan guarantee and request that the loan be issued by the Treasury Department’s Federal Financing Bank, USDA Rural Development (USDA-RD) programs require project developers to partner with private lenders that will fund the loan and apply to USDA for a guarantee of that loan.

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