Rural Business Investment Program (RBIP)

Below are Rural Business Investment Program definitions and requirements as outlined in the 2002 Farm Bill.

DEFINITIONS

Rural area -- an area that is (i) outside of a standard metropolitan statistical area, or (ii) within a community that has a population of 50,000 inhabitants or less.

Developmental venture capital -- capital in the form of equity capital investments in rural business investment companies with an objective of fostering economic development in rural areas.

Smaller enterprise -- a company that has (i) a net financial worth of not more than $6,000,000, and (ii) an average net income for the 2-year period of not more than $2,000,000, after Federal income taxes.

REQUIREMENTS

Minimum private capital to be an RBIC is $5 million, though $10 million is preferred.

75% of the capital must be invested in rural business concerns and not more than 10% of the investments can be made in a city of over 150,000 people.

RBICs must be designed “primarily to meet the equity capital needs of the businesses” and “not to compete with traditional small business lending by commercial lenders."

Short-term, non-equity investments of less than 5 years are permitted “only to the extent necessary to preserve an existing investment.”

Banks and savings association can establish and invest in RBICs.