USDA Business & Industry Loan
(B & I Loan)
Guaranteed Loans Program
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).
§ 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.