Comparison between USDA & DOE Loan Guarantees for First-Of-A-Kind Technologies

Posted by renewableenergyconsulting on April 13th, 2017

Here’s how the US Department of Agriculture Loans (USDA’s) Section 9003 Guarantee and U.S. Department of Energy’s Title XVII DOE Loan Guarantee compare with each other:

Similarities

• Both programs are designed specifically for commercializing first-of-a-kind technologies.
• These types of projects are almost impossible to fund through traditional sources of financing, since they are unproven at commercial scale and carry considerable risk.
• That’s why these programs were established – to provide a bridge over the “valley of death” for promising technologies that have been proven in prototype, at pilot scale, or in other countries, but have not been used commercially in the U.S. and, hence, cannot attract the funding necessary to be built.

Differences

USDA Section 9003 Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program:

• There is no cost to apply.
• Maximum loan is 0 million.
• Loans are arranged through commercial lenders who submit the application to USDA.
• Loans are awarded only to first-of-a-kind technologies and facilities.
• Applications are limited to projects located in rural areas (areas with populations of 50,000 or less).
• Loans are limited to three areas of focus: biofuels, renewable chemicals and bioproduct manufacturing. In all cases, a certain amount of biofuel must be produced.
• The program is funded through authorizations from Congress that are negotiated every five years through Section 9003 of the Farm Bill.
• USDA has two submission dates each year: April 1 and October 1 with letters of intent due March 1 and September 1.

DOE Title XVII Innovative Clean Energy Loan Guarantee Program

• Cost of applying is high.
• DOE has billion in funding authority and can finance projects in the billions of dollars.
• No additional Congressional appropriations or authorizations are required to fund the program. 
• The program finances renewable energy, energy efficiency, advanced nuclear energy and advanced fossil energy projects.
• DOE also has an Advanced Vehicle Manufacturing Program that funds innovations in automobile and light truck manufacturing. The two best-known innovations launched by this program are the Tesla Model S and Ford’s Eco-Boost engines.
• Loans can be financed through the Federal Financing Bank (FFB), a branch of the U.S. Treasury, commercial lenders or a combination of the two.
• FFB loans have ultra-low interest rates that are tied to 20-year Treasury notes as of the day of closing. Rates generally range between 2% and 3%.
• DOE allows facility loans that cover multiple projects, so long the projects use the same “new and significantly improved” technology and generally replicate each other.
• There are multiple application submission dates spread out over the next three years.
• There are four criteria for applying for a DOE Title XVII USDA loan guarantee. Projects must:

1. Involve a new or significantly improved technology compared to other similar technologies in use in the U.S.
2.  Make a significant contribution toward reducing greenhouse gas emissions.
3.  Be located in the U.S.
4.  Demonstrate the ability to repay the loan obligation.

For further information on applying for financing through one of these loan guarantees, contact: Craig Evans, Managing Director, Renewable Energy Consulting Services, Tel: 434-303-0800, Email: craig@renwable-energy.consulting, or visit the RECS website at www.renewable-energy.consulting.

About the author:

Renewable Energy Consulting Services is a professional Writer who likes to write about all Financing, grants or loan related topics. He shares ideas on Oregon Renewable Energy Companies, DOE Loan Guarantee, Renewable Energy Industry, Government Funding Solutions and more.

Recourse: http://www.writerscafe.org/writing/renewableenergyc/1896839/