USDA B & I Loan/ Guaranteed Loans Program:

Program Goal:

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

  • Provide employment

  • 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:

  • No Minimum

  • Up to $ 10 Million

  • Usually range from $ 200,000 to $ 5 Million

Types Of Assistance:

The federal guarantee available is dependent on the loan size & may be up to 85%.

Interest Rate, Terms, Payment Structure & Fees:

  • Rate:
    Lenderís customary commercial interest rateóNegotiated by the lender and  business, fixed or variable (But may not vary more often than quarterly).

  • Terms:
    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).

  • Structure: 
    Balloons are not permitted. Reduced payments may be scheduled in the first 3 years.

  • Fees:
    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.