USDA Business & Industry (B&I) Loan Programs

BUSINESS & INDUSTRY GUARANTEED LOAN PROGRAM

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.

Loan Purpose

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.

Equity Requirements

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).

Recourse

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.

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

Ineligible Industries

Investment(s) in speculative real estate

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 jobsFinders, packagers, or loan brokers

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

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