Accessing Rural Development Loans in Maryland to Grow Your Business

Rural areas face unique challenges when it comes to economic development and accessing capital However, the USDA Rural Development program provides an invaluable resource for rural business owners and entrepreneurs in Maryland – low-interest loans that can help launch or expand operations In this article, we’ll break down everything you need to know about Rural Development loans in Maryland.

An Overview of the Rural Development Loan Program

The Rural Development Loan Program is administered by the USDA Rural Development office to spur job creation and business growth in rural communities, It provides funding through two main channels

• Rural Economic Development Loans – Direct loans at 0% interest to local utility organizations, who then re-lend the funds to businesses for eligible projects. The loans to businesses can have flexible terms and support fixed assets, working capital, and more.

• Rural Economic Development Grants – Grants to establish revolving loan funds at local utilities and community development groups They use this capital to make 0% interest loans to businesses in their service area

Businesses of all kinds – retail, manufacturing, agriculture, tourism – are eligible if they are located in an eligible rural area. This includes towns with under 50,000 residents. The loans and grants prioritize job creation and retention.

Rural Development Loan Details for Maryland

For businesses and organizations based in Maryland interested in Rural Development funding, here are some key details:

• Local Utility Partners – You will need to partner with a local utility company that distributes electricity or telecommunications services to apply. They facilitate the application and lending process.

• Maximum Loan Amount – $2 million direct loan funded at 0% interest.

• Use of Funds – Equipment, real estate, working capital and operating expenses, business expansion, etc. Some restrictions apply.

• Terms – Up to 10 years for the utility. They set the terms for the business borrower. Deferrals on principal are possible.

• Application Timeline – Applications accepted year-round on a rolling basis. Approved on a quarterly funding schedule.

• Job Creation Requirements – Varies, but priority goes to projects that create quality jobs.

The Maryland Rural Development Office collaborates closely with local utility partners to administer the program. They help guide interested businesses through the application process.

Finding an Eligible Area in Maryland

With over 1.6 million rural residents, Maryland has many eligible areas for Rural Development loans. Applicants should first verify their address is in a qualified rural zone using the eligibility mapping tool.

In general, eligible rural areas in Maryland include:

• Small towns with under 50,000 residents
• Outlying low population communities within metro areas
• Rural zones in otherwise urban counties

Some examples of eligible rural cities and towns include Berlin, Cambridge, Princess Anne, Emmitsburg, Thurmont, Oakland, etc. Businesses located in these smaller communities may qualify.

Applying for a Rural Development Loan in Maryland

Ready to get started with an application? Here are the steps:

1. Find a Local Utility Partner – Connect with an electric co-op or telecom provider serving your region. Discuss the program and your business expansion goals.

2. ** Complete Application Materials** – Work with your utility partner to compile the required documents, budgets, certifications, and other items.

3. Submit Through Utility – Let your utility take it from there! They will submit the full application to the Rural Development state office on your behalf.

4. Await Approval Decision – Applications are reviewed on a quarterly funding schedule. If approved, the loan closes through your utility.

Be prepared to outline your project plans, existing operations, ownership structure, and financials. Rural Development will evaluate based on the economic benefits created, so make your case for job creation and local economic impact.

The utility partner you select will advise you through each step and help put the best foot forward. Their partnership is key to a smooth application process.

Rural Development Loan Success Stories in Maryland

Rural Development loans have made a real impact for rural business owners across Maryland. Here are just a couple recent examples:

• A $2 million loan helped Fourth Wave CiderWorks expand production capacity and storage at their fruit orchard and cider production facility near Frederick. The growth allowed them to meet increasing demand and add new staff.

• ABCS Fire & Safety received a $1.4 million loan to open a new 15,000 square foot facility in Berlin. The expansion added over 20 skilled jobs in the town.

• Hydroponic lettuce producer Cornerstone Farm Consultants utilized a $1.1 million loan to add two high-tech greenhouse units, increasing output. This project created 13 new high paying agriculture jobs.

These businesses have tapped into Rural Development loans to access capital they otherwise would not have qualified for as a start-up or rural operation. The flexible 0% financing enabled growth while retaining local jobs.

Considerations When Using a Rural Development Loan

Rural Development loans deliver attractive financing, but here are some considerations:

• You must project creating decent paying local jobs to secure funding. Temporary or seasonal jobs generally don’t qualify.

• Making the upfront effort to find and partner with a willing local utility can take time and paperwork.

• There may be extra monitoring, reporting, and site visits required by the USDA Rural Development office.

• Loan amounts over $1 million receive greater scrutiny. Be prepared to thoroughly prove need and community impact.

• Defaulting on the loan simply shifts the burden to your utility lender, so extend them courtesy throughout the term.

Access to capital remains one of the largest hurdles rural business owners face. Through its Rural Development loan program, the USDA provides a invaluable resource to finance growth in eligible regions like Maryland. If you have plans to expand facilities, equipment, staff or operations, the 0% loans may provide the affordable financing needed to turn those plans into reality.

By tapping into a strong local utility partner, navigating the documentation required, and putting your best foot forward, rural Maryland businesses have an opportunity to thrive with Rural Development backing. Consider if the loan program fits into your own growth initiatives today.