USDA Lending for Small, Rural Businesses

The USDA helps create jobs and stimulates rural economies by providing financial backing for rural businesses and properties. Its primary purpose is to create and maintain employment and improve the economic climate in rural communities. USDA Loan proceeds may be used for working capital, machinery and equipment, real estate, and certain types of debt refinancing.

This is achieved by expanding the lending capability of private lenders in rural areas and helping them service quality loans that provide lasting community benefits. This program represents a true private-public partnership.

The USDA Business and Industries Loan (B & I Loan) Program is a Federal loan guarantee program that was created to encourage commercial financing businesses based in rural areas. The goal is straightforward: create, save, and improve the economic and environmental climate of rural communities.

What Makes a B&I Loan Different?

The Business & Industry Loan program is lender-driven; in other words, the USDA guarantees the loan rather than lending directly.

How the B&I Loan Process Works

  1. A commercial lender requests the B & I guarantee
  2. The loan is approved or denied
  3. If the loan is approved, the commercial lender makes and services the loan.

B & I Guaranteed Loans Program Benefits

Businesses that obtain the B&I guarantee receive a higher loan amount. The B&I guarantee strengthens the loan application, allowing the bank to feel comfortable with a smaller equity injection.

B&I loans also offer lower interest rates and longer repayment terms. This greatly assists businesses that may not qualify for conventional commercial real estate financing by providing rural businesses with greater stability.

Greater stability helps leads to greater growth, expansion and rural employment.

B&I Loan Authorized Uses

The following is a list of the authorized uses for B&I guaranteed loans:

A borrower must be engaged in, or proposing to engage in, a business that will

  1. Provide employment
  2. Improve the economic or environmental climate
  3. Promote the conservation, development, and use of water for aquaculture or
  4. Reduce reliance on nonrenewable energy resources by encouraging the development and construction of solar energy systems, and other renewable energy resources.

B&I Authorized Loans can be used for:

  1. Business and industrial acquisitions, construction, conversion, expansion, repair, modernization or development costs
  2. Purchase of equipment, machinery or supplies.
  3. Start-up costs and working capital.
  4. Processing and marketing facilities.
  5. Pollution control and abatement.
  6. Refinancing for viable projects, under certain conditions.
  7. Purchase of start-up cooperative stock for family sized farms where commodities are produced to be processed by the cooperative.

Bottom line, the USDA Building and Industry Loan (B&I Loan) program is a terrific program if the commercial property is located in a town of less than 50,000 residents.

Interested in learning more about the B&I loan program? Contact us today at (732) 228-8088.

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