USDA Business and Industry Loans (B&I)

The Business and Industry (B&I) Guaranteed Loan Program is a loan guarantee program designed to assist credit-worthy rural businesses obtain needed credit for most any legal business purpose. The intent of this program is to save and create jobs in rural America.

 

How can loan funds be used? Eligible uses include, but are not limited to: 

• Business conversion, enlargement, repair, modernization or development

• The purchase and development of land, buildings and associated infrastructure for commercial or industrial properties

• The purchase and installation of machinery and equipment, supplies or inventory
• Debt refinancing when such refinancing improves cash fow and creates jobs
• Business and industrial acquisitions when the loan will maintain business operations and create or save jobs

What can loan funds NOT be used for?

• Lines of credit

• Owner-occupied and rental housing

• 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
• Distribution or payment to a benefciary of the borrower or an individual or entity that will retain an ownership interest in the borrower

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What is considered an eligible area?

• Rural areas not in a city or town with a population of more than 50,000 inhabitants, with certain exceptions

• The borrower’s headquarters may be based within a larger city as long as the project is located in an eligible rural area

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What type of businesses qualify for these type loans?

• For-profit or non-profit businesses

• Cooperatives

• Federally-recognized tribes
• Public bodies
• Individuals engaged or proposing to engage in a business

How are B&I Guaranteed 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 to the B&I loan program?

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 in the future on shorter term loans or balloon loans. The interest rates for the loans are negotiated between the lender and the applicant and may be either fixed or variable (or a combination of fixed and variable).

What are the business restrictions?

• Individual borrowers must be citizens of the United States or reside in the U.S. after being legally admitted for permanent residence

• Private-entity borrowers must demonstrate that loan funds will remain in the U.S. and the facility being financed will primarily create new or save existing jobs for rural U.S. residents