USDA Business and Industry Loans (B&I)
USDA Business LoansAt United Community Bank, we are committed to supporting the growth and development of rural businesses in the United States. Through the USDA Business and Industry (B&I) Guaranteed Loan Program, we provide creditworthy businesses in rural areas with the financial resources they need to thrive.
The USDA B&I Guaranteed Loan Program is a government-backed initiative to promote economic growth in rural communities by providing loans to credit-worthy businesses. These loans are administered by the United States Department of Agriculture (USDA) Rural Development program and are designed to stimulate job creation and retention, enhance rural infrastructure, and support business expansion in rural America.
What are USDA B&I Loans?
How are USDA B&I loans different from SBA 7 (a) loans?The B&I Guaranteed Loan programs and SBA 7(a) loans are similar in that a loan guarantee is provided, but the programs operate independently. The B&I program is specifically targeted to rural businesses. Rural Development has an extensive field structure of State and Area Offices that work closely with lenders in processing and servicing B&I loans. The lender and borrower work with a specific loan specialist in their State throughout the entire loan process. Other differences include a different fee structure and loan limits.
What are the benefits of USDA Business and Industry Loans?Borrowers can benefit from better pricing and terms with the B&I loan guarantee in place than are typically given with conventional loans. The loans must be fully amortized, without calls or balloon repayment structures. Longer terms can reduce additional loan fees that may be incurred on shorter-term loans or balloon loans. The loan interest rates are negotiated between the lender and the applicant and may be either fixed or variable (or a combination of fixed and variable).
Eligible uses of USDA B&I LoansUSDA B&I loans can be used for various business purposes, including:
- Business conversion, enlargement, repair, modernization, or development
- Purchase and development of land, buildings, and associated infrastructure for commercial or industrial properties
- Purchase and installation of machinery and equipment, supplies, or inventory
- Debt refinancing to improve cash flow and create jobs
- Business and industrial acquisitions to maintain operations and save or create jobs
Ineligible Uses of USDA B&I Loans
While USDA B&I loans cover a wide range of business purposes, there are certain limitations and ineligible uses, including:
- Lines of credit: USDA B&I loans are not intended for ongoing lines of credit.
- Owner-occupied and rental housing: Loans for residential housing projects are not eligible under this program
- Golf courses or golf course infrastructure
- Racetracks or gambling facilities
- Churches or church-controlled organizations
- Fraternal organizations
- Lending, investment, and insurance companies
- Agricultural production, with certain exceptions: While agricultural businesses are generally ineligible, there are exceptions for specific cases
- Distribution or payment to a beneficiary of the borrower or an individual/entity retaining ownership interest in the borrower
Eligible Areas for USDA B&I Loans
USDA B&I loans are designed to benefit rural areas, providing financial support to businesses outside of cities or towns with populations exceeding 50,000 inhabitants. The program encourages economic development and job creation in underserved rural communities, fostering growth and prosperity.
However, it's worth noting that even if your business is headquartered in a larger city, you may still qualify for a USDA B&I loan if the project is located in an eligible rural area.
Qualifying Businesses for USDA B&I Loans
A wide range of businesses and organizations can qualify for USDA B&I loans, including:
- For-profit or non-profit businesses
- Cooperatives: Agricultural cooperatives and other cooperative entities can access financing through this program
- Federally-recognized tribes