USDA Rural Development Loans
Develop the Rural Economy
The USDA Business and Industries (B&I) Program is a federally guaranteed loan framework this is designed to improve the economic climate and quality of life in rural communities in the United States. Projects are eligible if they are located in a town of less than 50,000 inhabitants. The federal loan guarantee creates incentives for lenders to make loans to these areas in need of development.
How may funds from a USDA B&I loan be used?
Eligible uses of the funding commonly include:
business acquisition when the loan will maintain or improve operations (save or create jobs)
purchase of equipment, machinery, supplies, or inventory
business expansion, repair, modernization and the like
purchase and development of land/buildings for commercial or industrial activities
debt refinancing if it improves business cash flow/creates jobs
additional working capital usually in combination with one of the above purchases
This type of loan is not designed for agricultural or farming activities. Other non-eligible uses for the loan proceeds include lines of credit, owner-occupied or rental housing, and golf/racetrack/church facilities.
Typical Conditions of a USDA B&I Loan
Business owners with current or planned commercial operations in a rural area can really benefit from this program. Often a project that might be redundant for a more populated area (and not get funded) could bring tangible economic value to an area not having a certain activity/product/service and thus get funded. In other words, the USDA B&I program increases access to affordable financing for rural businesses.
Key details of the loan program:
loan-to-value of up to 90% but more typically 70-80% (owner will need to contribute 10-30% of equity)
loan amounts of $500K to $25M with terms up to 30 years
sufficient collateral in the form of real estate, equipment, and/or inventory
personal/business credit, business financial capacity, and collateral are key factors in the underwriting decision
Contact us today for a free consultation about your rural business or development project idea. If provided with the address of the project, we will confirm that it is indeed located in an eligible area for this USDA loan program and move on to the next steps.