USDA Business & Industry Loan Programs (B&I)
The USDA Business and Industry (B&I) Guaranteed Loan Program is designed to assist rural businesses in communities of 50,000 or less obtain credit for most any legal business purpose. A borrower may be a corporation, partnership, individual, cooperative organization or other legal entity organized and operated on a profit or non profit basis. Individual borrowers must be citizens of the United States and corporations must be 51% owned by persons who are citizens of the United States.
- Business and Real Estate acquisitions, construction, conversion, expansion, repair, modernization or development.
- Purchase of equipment, machinery, or inventory.
- Start-up costs and working capital.
- Refinancing for viable projects.
For existing businesses, a minimum of ten percent (10%) tangible balance sheet equity is required at the time of issuing the loan note guarantee. For new businesses, twenty percent (20%) tangible balance sheet equity is required. Equity is calculated in accordance with general accepted accounting principles (GAAP).
All principals who own 20% or more of the business are required to provide a full guarantee. The guarantee of affiliated companies may be required based on the percentage of ownership of the affiliate and the borrower’s relationship with the affiliate.
- Investment(s) in speculative real estate
- Golf courses or similar recreational facilities
- Gambling activities
- Prostitution or activities of a prurient sexual nature
- Finders, packagers, or loan brokers
- Illegal drugs or drug paraphernalia
- Any project likely to result in the transfer of employment from one area to another
- Any project involving transfer of ownership, unless this will keep the business from closing, prevent the loss of jobs in an area or provide more jobs
- Paying off a creditor in excess of the value of the collateral
- Payment to owners, partners, shareholders or others who retain any ownership in the business
- Corporations and businesses not at least 51% owned and controlled by U. S. citizens
- Charitable and educational institutions, religious organization and affiliated entities and fraternal organizations
- Lines of Credit
- Financing agricultural production unless the business is also processing agricultural products
Benefits to Businesses
- Higher loan amounts
- 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