USDA Business and Industry Guaranteed Loan Program – Noteworthy Revisions For Community Banks

The Business and Industry (B&I) loan program administered by the United States Department of Agriculture (USDA or Agency) guarantees loans by qualified lenders to benefit rural businesses. For eligible projects, community banks can obtain an 80% guarantee for loans up to $5 million, a 70% guarantee for loans between $5 million and $10 million and a 60% guarantee for loans between $10 million and $25 million. The B&I guaranteed loan program allows lenders to expand their loan portfolio, obtain a deficiency guarantee, increase earnings by participating in the secondary market, make loans in smaller communities with traditionally lower collateral values and extend loans above their legal lending limits.

For each loan, lenders submit a detailed guarantee application to the Agency office in the state where the project is located. Approval or denial decisions generally take several weeks. Projects eligible for B&I financing include business acquisitions, commercial real estate purchases, startup costs and working capital, machinery and equipment purchases and some refinances.

On December 17, 2008, the USDA published a new interim rule pertaining to the B&I loan program in the Federal Register. Effective October 1, 2009, the new rule is designed to streamline the application, accelerate the guarantee approval process and expand the types of eligible projects. The Agency ultimately decided to abandon the new rule and instead focus on working within the existing regulatory framework to improve the B&I loan program.

Under the previous rule, the B&I loan program required lenders to compile burdensome applications and to deal with lengthy approval timelines and limited loan features. For example, a common lender complaint has been the laborious guarantee application process. For every loan under the previous regulations, B&I lenders had to submit to the local Agency all of their underwriting and loan approval documents, at least three B&I application forms, the draft loan agreement, copies of loan origination and servicing policies and procedures, and details concerning lending history, experience and their relationship with regulators. The Agency also awarded guarantees on a “priority scoring” basis, which gave loans in particularly rural areas with compelling purposes priority over otherwise eligible loans that earned a lower “score”. An approval or denial decision for lower scoring loans could take months from the application submission.

The USDA aims to reduce these drawbacks with the revised rule. The new rule attempts to streamline the original application process. Lenders must apply to participate in the guaranteed loan program by submitting background information such as descriptions of lending history and experience, policy and procedures and documentation concerning regulatory compliance (7 CFR 5001.9). Although lenders had to submit this information under the old rule, they are now permitted to submit summaries instead of copies of their policies and procedures (§5001.9(a)(1)). Once approved by the agency, lenders will no longer have to submit this background information when applying for loan guarantees (§5001.9(b)(4)). The revised rule also reduces the number of guarantee application forms (§ 5001.12(a)) and eliminates the draft loan agreement (§5001.34). In addition to simplifying the application process, the new rule endeavors to reduce the guarantee approval timeline.

Two changes aim to accelerate the guarantee approval process. The Agency has eliminated its “priority scoring” system in favor of a simpler first-come-first-serve approach (§5001.103(f)(1)). Additionally, the Agency has created a preferred lender program (PLP) (§5001.9(d)). The benefits of obtaining PLP status include a ten day approval or denial decision (§5001.11(c)), a smaller guarantee application package (§5001.12(b)) and the opportunity to obtain preferred status in more than one state with a single PLP application (§5001.9(d)(2)). In addition to streamlining the application process, the Agency has introduced some new loan features to the B&I loan program.

B&I guarantees may now be issued for additional uses and purposes. Under the previous regulations, lines of credit were ineligible. Lines of credit are now eligible when used for annual operating/business expenses, debts advanced for the current operating cycle, scheduled non-delinquent term borrower debt or closing costs (§5001.103(b)(2)(xix)). Projects involving leasehold improvements and the purchase of mixed use commercial and residential buildings are also now eligible for B&I guarantees (§5001.103(b)(2)(xviii, xx)). Another new feature removes the prohibition that interest rates change no more often than quarterly, and allows lenders to set a variable rate that adjusts as often as daily (§5001.31(a)). These new features allow lenders to obtain a valuable B&I guarantee for projects that previously were ineligible.

Although these features are now available to lenders, some revisions to the rule are less clear and useful tools have been eliminated. For example, the Agency has replaced the proposed cash equity criterion with a debt-to-tangible net worth ratio criterion (§5001.6(c)), but has failed to define this calculation other than referring to Generally Accepted Accounting Principles. Additionally, the rule eliminates the Agency’s limited authority to issue 90% guarantees. Again, the Agency ultimately decided to abandon the new rule and instead focus on working within the existing regulatory framework to improve the B&I loan program.

Best Ideas For a Good Business – Service People

The best ideas for a good business lie in the service industry. People need to be served in some way and you need to make sure you can do that if you want to be profitable. You can’t be profitable unless you do something that people need.

So what are some good business ideas in the service industry? Well, there is customer service. That is an industry that is quite profitable because people need things. People need questions answered and needs met.

You can actually do a customer service job from your home. Call centers all around are now routing calls to people who work out of their homes. Whether it is answering general questions to solve a problem or technical support, the job is there.

You can also try providing support for products that you know about. No, you don’t have to work for the company, but you can say something such as “I am an expert with this program and can help you. For $10 an hour, I can help you do things with this program that you never thought was possible.” That is a great line to use on your website.

So if you need to start a good business, the world is your playground. Look at what you feel you can do best and capitalize on that. If you don’t, then you have a talent that is going to waste. Go ahead and let the world benefit from that talent. You’ll agree that it was the wisest move you could ever make.

Business Service Management – How Your Business Can Benefit From It

Businesses in most of the industries today rely on their IT infrastructure for delivery of their products or services. Despite this, business owners and IT managers face difficulty in figuring out the performance of their IT infrastructure and analyzing how that performance affects their bottom line at any given point of time. If you are wondering the same about your IT infrastructure, the answer to your queries is Business Service Management (BSM). Let’s discuss some aspects of Business Service Management and how it can benefit your business.

What Business Service Management Is

BSM is a way to monitor IT services so that one can understand its impact on the business’ bottom line. Through it, IT managers can monitor application performance so that they can identify, foresee and solve application bottlenecks. In case of larger organizations, the business owners and IT managers need to know which department if going to be affected the most in case of an outage, so that its impact can be minimized. Through BSM, the interests of the business can be protected by monitoring, tracking and managing the investment and operational aspects of the IT department. BSM hence ensures that IT processes are aligned with business processes for the maximum benefit of the business.

How you can use Business Service Management for your business

If your business depends on IT department for providing services or products or your customers, Business Service Management can be extremely useful to you. Even if you have a large company with a huge IT department, a BSM solution can help you undertake effective ITSM. When you have a Business Service Management solution in place, in case of a system failure, you will be able to know exactly where the error has occurred on a real-time basis. You will hence be able to analyze the financial impact of the failure as well as instruct the IT manager of steps to take to ensure that application performance is up to the mark.

Some of the many benefits of a BSM solution for your business are:

  • It ensures application performance is up to the mark at all times
  • BSM also ensures the availability of business-critical applications
  • A BSM solution helps IT managers to ensure that service level agreement conditions are met
  • You can make IT service management easier with a customized BSM solution
  • You can understand the impact of a system failure on your bottom line through Business Service Management
  • A BSM solution will help you avoid downtime of applications by identifying bottlenecks and figuring out their cause
  • Through a BSM solution, you can reduce losses of downtime and improve productivity of your business

Communication In Business Services Firms

Good communication in business services firms can make or break a sale. When you market your company and services, the only thing a prospective client cares about is what you will be able to do for them. Clearly communicating that with them isn’t as simple as displaying a list of services. It involves give and take and a thorough understanding of the prospects in your marketplace.

To apply the principles of good communication, you can start by learning as much as you can about your prospects. Understand their desires and their pain. Identify their needs and prepare for your meetings accordingly.

You can anticipate generic problems that your prospect might have, not just company specific ones or problems inherent in the industry. Your client expects you to be ahead of that curve. If you are pitching a new service to an existing client, can you communicate how you might help the customer become an internal problem-solver or address pandemic challenges. You can actually help transform your client’s liability into an asset through quality communication.

In some industries clients might be afraid that they’re not working with the newest equipment, or perhaps they feel they can’t increase product production speed and efficiency. Another fear that clients experience is the fear of lagging behind, not being able to match their competitors or serve their customers with the best products or services. There could be a fear that they won’t be able to apply state-of-the-art information systems, improve client communications, or have a market-savvy web site. These fears can be allayed by offering the value of your perspective along with open, clear communication.

Another difficulty common in sales situations may be the need to overcome hidden decision making. This is an excellent example of the need for communication in business services firms. A firm’s strategy must include a systematic approach to finding out what the decision makers won’t reveal on their own. Do you know who is the real buyer of the service or product you are selling? Who is the real user? When are the decision maker and the person the company sent to the sales meeting actually the same person? Having clear communication with your sales team and with your prospects will alleviate the tangle that can result from the absence of this information.

The way you sell products and services should directly reflect the way you work internally. Where it’s appropriate, you may want to propose regular meetings with your team and include budget reviews as items on the agenda. Likewise, you’ll want to make the buyer feel just how assiduous you are in keeping them aware of what is happening and how much it is costing. This level of communication is uncommon in business services firms, but it can make or break the future of your client relationships. Your investment in communication will translate directly to your bottom line.