USDA Business & Industry Loan

(B & I Loan)

Guaranteed Loans Program

Program Goal:

The USDA B & I 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: Lender’s customary commercial interest rate—Negotiated 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--30 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: Lender’s 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.

USDA Business & Industry Loan

(B & I Loan)

Guaranteed Loans Program

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:

§ 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: Lender’s customary commercial interest rate—Negotiated 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--30 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: Lender’s 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.