Rural Economic Development Loan
The Rural Economic Development Loan (RED Loan) is a zero-interest loan to the ultimate recipient. The RED Loan has a term of 10 years with a one- to two-year payment moratorium. The balance of the loan must be repaid in the remaining years of the 10-year term. The maximum amount that can be borrowed pursuant to this program is $740,000. The intent of this program is to create jobs in rural areas. A letter of credit is required as collateral under the program.
Applications for RED Loan funds must be completed by either electric cooperatives or rural telephone companies that are eligible to receive funds from the Rural Utilities Service (RUS). Each application competes against other applications nationally on a quarterly basis.
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Rural Economic Development Grants
The Rural Economic Development Grant (RED Grant) is a zero-interest loan to the ultimate recipient. The RED Grant has a term of 10 years with a one- to two-year payment moratorium. The balance of the loan must be repaid in the remaining years of the 10-year term. The maximum amount that can be borrowed pursuant to this program is $300,000. RED Grant funds are available to nonprofit entities, local and county governments and rural health organizations. The intent of this program is to create jobs in rural areas. A letter of credit is required as collateral under the program.
Applications for RED Grant funds must be completed by either electric cooperatives or rural telephone companies that are eligible to receive funds from the Rural Utilities Service (RUS). Each application competes against other applications nationally on a quarterly basis. The Grant funds repaid by the recipient are retained in a Revolving Loan Fund (RLF) that is available to fund other economic development projects in rural areas.
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Revolving Loan Fund (RLF)
PowerSouth and most of its distribution members have established Revolving Loan Funds. Each Revolving Loan Fund has a work plan that governs the use and administration of its funds.
Most RLFs have a maximum loan of $200,000 and a minimum loan of $20,000. The term for each loan varies from three to ten years, depending on the nature of the project financed. Interest on the loans is usually set at one percent (1%) below prime, with a floor of three percent (3%). RLF funds are intended for gap financing and are usually limited to one-third of the total value of a project. A letter of credit is typically required as collateral. The intent of the program is to create jobs in rural areas and to improve rural economies.
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Business Development Loan (Speculative Building Program)
Under this program, PowerSouth will loan 50 percent (50%) of the funds for a qualified project (up to $400,000). The local member system provides 25 percent (25%) of the funds for the project (up to $200,000). The local community provides the remainder of the funds for the project. The interest rate for funds under this program is zero-percent. The term for this loan is the earlier of 48 months or the date the property is sold. In the event the property is leased or occupied prior to the end of the 48-month term, the borrower must pay interest on the loaned funds for the remainder of the loan term. Funds under the program are intended to finance facilities that are served by PowerSouth member distributors.
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Local Government Energy Loan Program (ADECA)
Under the ADECA program, local governments and boards of education may borrow funds to improve energy efficiencies of buildings constructed prior to May 1, 1989. These funds are available at the interest rate of zero percent. The term of these loans can extend for up to 10 years. This program is available to local and county entities in communities less than 20,000 population and counties less than 50,000 population. The maximum loan amount under this program is $150,000 for local and county governments and $150,000 per school campus (not to exceed $300,000 per school system). A letter of credit is required as collateral for loans under this program.
For more information on these programs, contact:
J. Victor Wyatt, Jr.
Economic Development Funding Representative
PowerSouth Energy Cooperative
2027 East Three Notch St.(36421)
P.O. Box 550 (36420)
Andalusia, AL
Fax: 334-427-3781
Phone: 334-427-3228
Email: victor.wyatt@powersouth.com
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