USDA B & I Loan/ Guaranteed Loans Program:
The USDA Business & Industry Loan program is designed to encourage
the commercial financing of rural businesses, thereby, achieving the
primary purpose of the program to;
- Create and save rural jobs and
- Improve the economic and environmental climate
of rural communities.
What Makes B & I Loans Different:
The Business & Industry Loan program is lender-driven.
The USDA guarantees the loan rather than lending directly. A commercial
lender requests the B & I guarantee, &, if approved,
it makes and services the loan.
Benefits Of The B & I Guaranteed Loans
Program For Businesses:
Higher loan amounts, strengthens the loan
application, less equity injection, lower interest rates
and longer repayment terms assist businesses that may
not qualify for conventional lender financing.
Assist a business in providing stability,
growth, expansion and rural employment.
Authorized Uses Of Loan Funds:
A borrower must be engaged in or proposing to
engage in a business that will
Improve the economic or environmental climate
Promote the conservation, development, &
use of water for aquaculture; or
Reduce reliance on nonrenewable energy
resources by encouraging the development &
construction of solar energy systems, and other
renewable energy resources.
Authorized Loan Purposes
Business and industrial acquisitions,
construction, conversion, expansion, repair,
modernization or development costs.
Purchase of equipment, machinery or supplies.
Startup costs and working capital.
Processing and marketing facilities.
Pollution control and abatement.
Refinancing for viable projects, under certain conditions.
Purchase of startup cooperative stock for family sized
farms where commodities are produced to be processed by the cooperative.
Size of Loan:
Types Of Assistance:
The federal guarantee available is dependent
on the loan size & may be up to 85%.
Interest Rate, Terms, Payment Structure & Fees:
Lenderís customary commercial interest rateóNegotiated by the
lender and business, fixed or variable (But may not vary
more often than quarterly).
Working Capital --7 years maximum
Equipment 15 years maximum (not to exceed useful life of collateral).
Real-Estate 25 years maximum (not to exceed useful life of collateral).
Balloons are not permitted. Reduced payments may be
scheduled in the first 3 years.
Lenderís reasonable & customary fees are permitted and
should be negotiated by the lender & business. The USDA charges a
one-time fee equal to 2% of the guaranteed amount.