Appendix C to Subpart E of Part 1980 - Guidelines for Loan Guarantees for Alcohol Fuel Production Facilities
7:14.1.1.1.9.2.12.55.19 : Appendix C
Appendix C to Subpart E of Part 1980 - Guidelines for Loan
Guarantees for Alcohol Fuel Production Facilities
(1) Alcohol production facility. An alcohol production
facility is a facility in which alcohol, suitable for use by itself
or in combination with other substances as a substitute for
petroleum or petrochemical feedstocks and not suitable for beverage
purposes, is manufactured from biomass.
(2) The alcohol production facility includes all facilities
necessary for the production and storage of alcohol and the
processing of the by-products of alcohol production. The intent is
to limit the alcohol and by-products processing facilities to those
facilities which are necessary to yield marketable products and
necessary for the financial success of the project. Further
refinements, such as gasoline blending or the construction of
facilities which use the alcohol or by-products in another
manufacturing process, are not considered part of the alcohol
production facility.
(3) Application will be reviewed by both B&I personnel and
the State Office engineer and forwarded to the National Office if
approval is recommended.
(4) The applicant should have a startup tangible book
equity of 20-25 percent. (Appraisal surplus and subordinated debt
are not eligible equity items.)
(5) Loan maturity maximums will be as follows:
Real Estate = 15-20 years Machinery & Equipment = 10 years or less
depending on the estimated life of the equipment involved Working
Capital = 3 years (It is assumed that the additional equity
required for these projects will provide much of the working
capital needs.)
(6) Farmers Home Administration or its successor agency under
Public Law 103-354 will ordinarily only finance new facilities and
will not get involved in the refinancing of existing ones.
(7) Priority consideration will be given to the use of primary
fuel other than petroleum or natural gas.
(8) A positive energy balance must be indicated and supported by
appropriate data; i.e., the energy content of the alcohol produced
at the alcohol production facility must be greater than the energy
used to produce the alcohol and by-products.
(9) Plant location, in relation to feedstocks, primary fuel and
markets for product and by-products, will be an important
consideration.
(10) Debt refinancing will only be considered in modest amounts
and only when necessary to provide a satisfactory lien
position.
(11) Feasibility studies are very important and required and
will be prepared by competent and knowledgeable independent
parties.
(12) Participating lenders must either have expertise or the
availability of expertise in this field.
(13) The proposed operating managers must have experience in
this or a related field.
(14) Alcohol Fuel Production Facilities are eligible for
assistance under the Drought and Disaster (D&D) Guaranteed Loan
and Disaster Assistance for Rural Business Enterprises (DARBE)
programs described in this subpart, and especially in appendix I
and appendix K. Any such loan must meet the requirements for
D&D and DARBE loans.
[52 FR 6522, Mar. 4, 1987, as amended at 53 FR 40403, Oct. 17,
1988; 54 FR 5, Jan. 3, 1989, and 54 FR 26946, June 27, 1989; 54 FR
42483, Oct. 17, 1989]