§2009cc–8 Rural Business Investment Companies

Summary

To be a rural business investment company, it must be set up under State law as one of three kinds of businesses: a corporation (a company with shareholders), a limited liability company (owners with limited personal risk), or a limited partnership (owners with different roles). Corporations must promise to exist for at least 30 years unless shareholders end it sooner. Limited partnerships and limited liability companies must promise to exist at least 10 years. The company must have the powers it needs to do its work. The company’s formation papers must say its purpose, name, where it will work, where its main office is, and the amount and types of shares. The Secretary must approve those papers. Private capital must be at least $5,000,000, or $10,000,000 if the company will issue participating securities the Secretary might buy or guarantee. The Secretary can allow less than $10,000,000 but not under $5,000,000 for special cases. Companies get 2 years to meet the capital rules. The Secretary will also check that capital is adequate, that the company can follow the rules, that at least 75% of money is invested in rural businesses (and no more than 10% in areas tied to a city over 150,000), that the company mainly provides equity and does not compete with banks, and that any short-term loans under 5 years are only to protect an existing investment. For companies licensed after May 13, 2002, managers must be independent from the owners.