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ExpectMore.govExpectMore.gov home pageEXPECT FEDERAL PROGRAMS TO PERFORM WELL, AND BETTER EVERY YEAR.
 
Program Assessment

Program

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Rural Business and Industry Guaranteed Loan Program

USDA's Rural Business-Cooperative Service provides Business & Industry Guaranteed Loans for job creation and to stimulate rural economies by providing financial backing for rural businesses. Most legal organized entities are eligible, including: cooperatives, corporations partnerships, trust, profit or nonprofit entities.

Rating

What This Rating Means

PERFORMING
Adequate

This rating describes a program that needs to set more ambitious goals, achieve better results, improve accountability or strengthen its management practices.
  • There is increased concern over the number of defaulted loans occurring in this program. There are still some informational gaps on what is causing these defaults, and no standard way to remediate the problem.
  • Current subsidy rates have remained relatively static, and do not appear to capture the true costs of the program. The subsidy rate needs to be reevaluated to incorporate increased defaults, the incorporation of user fees, and the unidentified effects of hurricane Katrina.
  • USDA contracted with the University of Missouri to determine the effect of the Rural Business programs on rural America. This study assisted in measuring the quality of jobs and how industries in a region link. The study provides a composition model for five states, providing insights into the users of the program.

Improvement Plan

About Improvement Plans

We are taking the following actions to improve the performance of the program:

  • Rewriting program regulations to address identified concerns and deficiencies, such as lender performance and eligibility, borrower eligibility, priority goals, and underwriting requirements.
  • Improving long-term performance measurement by comparing actual program data on the types of jobs supported each year with established benchmarks based upon Department of Labor statistics.
  • Expanding the University of Missouri study from a state specific to a national study (SEBAS, phase I and II). This will allow RBS to obtain tangible statistics on the effectiveness of the program.

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