In this paper we will describe the rural loan scheme provided by the US Department of Agriculture, known as USDA. The US government aims to develop the rural economic structure, that is why it starts this program.
To strengthen the socio-economic structure of the rural areas in the country the United States Department of Agriculture (USDA) provides credit to the poor people. Another aim of the USDA was to enhance their business and industry program.
Through the rural loan program, the USDA takes some initiative to provide easy access to credit to the poor people of the rural areas.
Advantages of USDA Rural Loans:
The authority will provide the guarantee upto 80% of the loan.
The USDA will finance in the real estate improvement programs for a long period.
Usage of Funds:
The funds have been used to purchase land, agricultural equipments and buildings.
Funds can be used as a working capital.
Funds may be used to refinance debts.
Features of Loan:
The interest rates may vary for the guaranteed loans.
The rate of interest will be fixed by the borrower and the lender only. But it has to be approved by the USDA.
The upper limit of industry and business loan amount is 10 million dollars.
Loans for the production of alcohol fuel is limited to 20 million dollars.
The authority will not sanction rural loan for the production of goods that have low demand in the market.
Last Updated on : 30th July 2013