Business and Industry Loan Guarantee Program

Program Description: Encourages the commercial financing of rural businesses. Authorized loan purposes include: real estates, building, leasehold improvements, equipment, inventory, working capital, loan fees and costs, professional services, and feasibility study costs. The program helps rural business by guaranteeing the loans of commercial lenders who might not otherwise extend credit. It is fundamentally a lender driven process. USDA cannot consider a B&I proposal in detail until a lender expresses serious interest in the project.

Eligibility: Lender Eligibility - Any Federal or State chartered bank, Farm Credit System; Bank of Cooperatives; Savings & loan or Building & Loan Association; bank-holding company's mortgage company; credit union; or insurance company - subject to government credit examination and in good standing. Other lenders with commercial lending experience and financial strength may also be approved. Lender's officers/directors/owners may not have a substantial financial interest in the borrower.

Borrower Eligibility - Most types of enterprises qualify - manufacturing, wholesale, retail, service - new or existing. Project must in a rural area - beyond any 50,000+ population city and its urbanized periphery. Proprietorships, partnerships, corporations, LLC's, nonprofits, tribes, or political subdivisions. Majority ownership must be held by US citizens or permanent residents. Less that 20 percent ownership by government or military employees.

Funding Information: There is no minimum size, but loans typically begin at SBA maximum ($750,000) and go up to $10 million. Loan guarantee limits: 80% up to $5 million and 70% over $5 million to $10 million. The rate is based on the lender's customary commercial interest rate - negotiated by lender and business; fixed, or variable (but not more often than quarterly) tied to a published base rate. Terms: for working capital is 7 years max.; equipment is 15 years or useful life; real estate is 30 years. Balloons are not permitted. Reduced payments may be scheduled in the first 3 years. Fees include lender's reasonable and customary fees, (negotiated by lender and business) and USDA charges a guarantee fee equal to 2 percent of the guaranteed amount.

Timelines: Applications are accepted year round. USDA meets with all parties at the project site and makes a preliminary determination of project acceptability, normally within 15 days. After lender and business complete their application, approval takes less than 60 days.

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