Give Us a Call 24/7 to Speak to a Loan Specialist: (866) 526-0238
Give Us a Call 24/7 to Speak to a Loan Specialist: (866) 526-0238

USDA Business and Industry Loans

What is a USDA Loan?

USDA Business and Industry financing are loans provided through a government program specifically targeted to rural small businesses to help bolster lending to creditworthy borrowers. The purpose of the program (administered by the Rural Business and Coop Program — part of the USDA’s Rural Development) is to improve economic health in rural areas with populations less than 50,000 people by having the government guarantee loans originated by private commercial lenders (federal or state chartered banks, savings and loans, farm credit banks and credit unions). By using the USDA business and industry guarantee, lenders are able to offer borrowers better rates and longer repayments terms because the lenders’ risk is reduced. USDA B&I financing must be fully-amortized term loans, as lines-of-credit are not offered. Borrowers are allowed to be headquartered in a larger area, provided the particular business project is located in a rural area, whereas the USDA lender may be located anywhere. If the borrower should default on their loan, the government agrees to cover lender losses up to $25 million dollar. Loan guarantees are structured as such:

  • 80% for loans of $5 million or less
  • 70% for loans between $5 – $10 million
  • 60% for loans over $10 million

USDA Uses

Most types of rural small businesses meet USDA eligibility requirements, including for-profit and nonprofit corporations, manufacturing companies, wholesale traders along with the retail and service industries. Use-of-funds can be used for virtually any business activity except for owner-occupied housing, golf courses, churches, lending organizations and a few other restrictions. Eligible businesses may use USDA Business and Industrial Loans for the following:

  • Startup costs
  • Business repair, modernization and development
  • Purchase and development of land, buildings and/or facilities in rural communities
  • Equipment purchases
  • Leasehold improvements
  • Machinery purchases
  • Purchase supplies
  • Purchase inventory
  • Refinance business debt (if it creates jobs)
  • Business and industrial acquisitions

Need a USDA Loan?

Get the Right USDA Loan For Your Business

Approval Rates

Traditional Banks45%
Large Banks25%
Credit Unions50%
Community Banks50%

Want To See Your USDA Options?

Compare USDA Options to Find the Best Loan For Your Business

Details

  • Origination fee: 3%
  • Renewal fee: 0.5% of principal
  • Max real estate term: 30 years
  • Max term on machinery and equipment: 15 years
  • Maximum working capital term: 7 years
  • No balloon payments
  • Down payment existing businesses: 10%
  • Down payment startups: 20%
  • Personal guarantee required: Yes

Documents

  • Credit application
  • Business tax returns
  • Financial statements
  • Schedules of liabilities
  • Personal tax returns
  • Personal financial statement
  • A/R and A/P aging schedules
  • Appraisals (if applicable)

Pros

  • Better rates than many other forms of financing
  • Access to capital where it wouldn’t have been available before
  • Long terms

Cons

  • Restrictions based on geography
  • Requires good credit
  • Requires 10-20% downpayment
  • Fees can be expensive

Want to Talk to a Specialist?

Give us a Call to Discuss Your Options

Get a USDA loan

Fill-out the form below to get a financed