USDA Business & Industry Loans

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The USDA Rural Development Business and Industry Loan Program provides loan guarantees to eligible lenders for the financing of rural businesses. The program aims to support the development and growth of rural economies by providing access to capital for small and medium-sized businesses in rural areas. Borrower can have both an SBA loan and USDA loan. These two powerful loan programs are frequently used together when a borrower with an SBA loan needs more than $5M in funding. As with SBA loans, can provide you with a list of lenders that may provide USDA commercial loans. Just contact us and we will be glad to help at no cost to you.

For your convenience, we have highlighted a few of the major differences between the USDA bank loan program and the SBA’s 7(a) loan program in the following table:

USDA LoanSBA 7a Loan
U.S. Business LocationPopulations < 50,000Anywhere
Maximum Loan$25,000,000$5,000,000
Guarantee fees3%2 - 3.75%
Renewal/Servicing Fee.5%None
Maximum Loan Term30 years - Real Estate
15 years - Equipment
7 years - Working Capital
25 years - Real Estate
10 years - Everything but RE
Business net worth10% tangible net worth; 20% for startups.None
Interest RateNegotiated with lenderSBA sets a max rate

Top Benefits of USDA Business and Industry (B&I) Loans

Comprehensive Financing

With a USDA Business and Industry Loan, you can consolidate multiple funding needs into a single loan. Whether you require capital for real estate acquisition, equipment refinance, or other eligible project costs, this loan option covers them all.

Extended Loan Terms

Longer loan terms offered by USDA B&I Loans can significantly reduce monthly payments for borrowers. Real estate loans can extend up to 30 years, equipment loans can have terms of 15 years, and working capital loans offer a repayment period of 7 years.

Generous Loan Amounts

USDA loans offer higher loan limits compared to many other financing options. You can access loan amounts of up to $25 million.

Flexible Real Estate Options

Unlike many loan programs, USDA Business and Industry Loans do not impose a minimum owner occupancy requirement. This means that borrowers can acquire or refinance real estate without the obligation to occupy the property. Even investment properties, such as retail or office lease facilities, are eligible for financing.

Versatile Interest Rate Options

Lenders have the freedom to choose the interest rate structure that suits their borrowers’ needs. Whether they prefer variable or fixed rates, with or without ceilings or floors (as long as it adheres to legal rates), they can tailor the loan terms accordingly. Lenders also have the option to include prepayment penalties, although USDA does not require them.

Broad Applicant Eligibility

USDA Business and Industry Loans do not impose size standard criteria on applicants. This means that businesses of various sizes, ranging from individual proprietorships to publicly traded companies, can qualify for this financing opportunity.

Choosing a USDA Business and Industry Loan ensures a comprehensive, flexible, and financially favorable solution to support your business’s growth and development.

Top USDA Business and Industry Lenders

Top USDA B&I lenders  have extensive experience working with USDA B&I loans. They are familiar with the application process, documentation requirements, and specific criteria that need to be met. Their expertise can help streamline the loan process and increase the likelihood of approval. The top USDA B&I lenders per the USDA’s most recent commercial lending report are:

Lender Name# LoansTotal LoansAvg Loan
LIVE OAK BANKING COMPANY24$121,750,000$5,072,917
NORTH AVENUE CAPITAL, LLC20$131,245,000$6,562,250
GREATER NEVADA CREDIT UNION12$117,886,000$9,823,833
AMERISTATE BANK8$25,958,000$3,244,750
BANK OF SPRINGFIELD7$5,331,978$761,711
BOM BANK6$77,797,800$12,966,300
UNITED COMMUNITY BANK6$47,438,000$7,906,333
WEST TOWN BANK AND TRUST6$23,122,000$3,853,667
TOUCHMARK NATIONAL BANK5$33,282,000$6,656,400
BYLINE BANK5$31,012,000$6,202,400
PACIFIC PREMIER BANK5$19,857,000$3,971,400
COLUMBIA BANK5$12,657,000$2,531,400
UMPQUA BANK5$9,152,100$1,830,420
OLD WEST FEDERAL CREDIT UNION5$8,320,735$1,664,147
STONE BANK4$26,044,000$6,511,000
BANK 344$12,960,000$3,240,000
FIRST INTERSTATE BANK4$12,856,000$3,214,000
LEGACY BANK AND TRUST COMPANY4$6,268,000$1,567,000
OLD MISSOURI BANK3$20,668,600$6,889,533

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Comparison of SBA 7(a), SBA 504, and USDA B&I loans

With out Lender Connect tool, we can match you with lenders who underwrite USDA B&I loans, SBA 7a, and/or SBA 504 loans. Some lenders in our network will actually combine loans together, such as a 7a with a B&I loan, or a 7a with a traditional commercial and industrial loan.

A snapshot of the various features of each of the three major government-assisted loan programs in America:

FeatureSBA 7(a) LoanSBA 504 LoanUSDA B&I Loan
Loan PurposeBroad range of business usesAcquisition or improvement of fixed assets (including real estate)Business development, including real estate projects
Loan Maximum$5 millionGenerally $5 million but $5.5 possible for certain projectsGenerally $10 million but $25M possible for “high priority” projects
Use of FundsReal estate purchase, construction, refinancing, working capital, equipment, and moreAcquisition, renovation, or construction of fixed assets (land, buildings)Real estate acquisition, construction, refinancing, equipment, working capital, and more
Equity Requirement10% – 20% traditionally. SBA lenders may go lower starting in August 202310% – 20% depending on business age and property type10% tangible equity for existing biz. 20% for new biz
Lender InvolvementSBA Lender works directly with the borrowerLoan split between a Certified Development Company (CDC), and SBA LenderUSDA Lender works directly with the borrower
Loan StructureSingle loanTwo loans: First mortgage from an SBA lender and a second mortgage from a CDCSingle loan
Loan TermsUp to 10 years; 25 years for real estate10  years for equipment; 25 years for real estate7 years working capital; 15 years for equipment; 30 years for real estate
Interest RatesNegotiated between lender and borrower, subject to SBA maximum interest rateFixed or variable rates set by the CDC, below-market rates for the CDC portionNegotiated between lender and borrower
Borrower RequirementsSatisfy SBA eligibility criteria, demonstrate repayment ability, good credit historySatisfy SBA eligibility criteria, owner-occupancy required, create or retain jobsSatisfy USDA eligibility criteria, demonstrate repayment ability, collateral, good credit history
Job Creation/RetentionNot a specific requirementMust create or retain jobs based on SBA job creation targetsMust create or retain jobs in rural areas (population under 50,000)
Application ProcessDone through an SBA-approved lenderCDC and SBA lender collaborate in the application processDone through an approved USDA lender
SBA/USDA GuaranteeUp to 85% guarantee on loansTypically 40% – 50% guarantee on the CDC portion60% – 80% depending on loan size
Guaranty Fee2% for loans of  $125K – $150K, 3% for loans $150K – $700K, and 3.5% for loans > $700K. Fee waived for veteransBorrower paid CDC fees included in loan3% of guaranteed portion of loan
Renewal/Servicing FeeN/AN/A.5% for B&I; .25% for energy loans
Borrower GuaranteePersonal guarantee >=20% ownersPersonal guarantee >=20% ownersPersonal guarantee >=20% owners

FAQs related to USDA Rural Development Business & Industry Loans

What is considered an eligible area?

Eligible areas include any area other than a city or town with a population of 50,000 or more. However, there are some exceptions to this rule, and it’s best to check with the USDA to determine if a specific location is eligible by inputting the project’s address at the USDA site here.

What type of organizations may qualify?

For-profit businesses, nonprofit organizations, cooperatives, federally recognized tribes, and public bodies may qualify for the program. The businesses must be located in a rural area, which is defined as any area other than a city or town with a population of 50,000 or more.

What are the borrowing restrictions?

Borrowers may receive up to 80% of the total project cost, with a maximum loan amount of $25 million. There is no minimum loan amount.

What are the eligible uses of loan proceeds?

Loan proceeds may be used for a variety of purposes, including the acquisition, construction, conversion, expansion, repair, or modernization of a business or project. The funds may also be used for the purchase of equipment, machinery, or inventory.

What are the ineligible uses of loan proceeds?

Loan proceeds cannot be used for certain purposes such as a line 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, or distribution or payment to a beneficiary of the borrower or an individual or entity that will retain an ownership interest in the borrower.

What are the loan terms for a USDA commercial loan?

Loan terms are negotiated between the borrower and lender but typically range from 7 to 30 years. The loan terms cannot exceed the useful life of the assets being financed.

What are the interest rates for USDA business loans?

Interest rates are negotiated between the borrower and lender but are subject to USDA approval. Interest rates may be fixed or variable, and the maximum interest rate is based on the lender’s cost of funds.

What are the applicable USDA guarantee fees?

There is an initial guarantee fee of 3% of the guaranteed amount, which may be financed as part of the loan. There is also an annual renewal fee of 0.5% of the outstanding loan balance.

What are the underwriting standards?

The program uses the same underwriting standards as commercial banks. Borrowers must have a reasonable assurance of repayment, and lenders must be able to demonstrate that they have performed adequate due diligence. The USDA will also review and approve the loan guarantee before it can be issued.

Can a USDA B&I loan be combined with an SBA loan?

Yes. Because the SBA loan limit is $5M, some borrowers in rural markets will combine an SBA loan with a USDA loan or a commercial loan.

What are SBA USDA loans?

The SBA and USDA are separate government agencies with their own lending programs that are facililitated by SBA lenders and USDA lenders. There is no “SBA USDA loan,” but rather SBA loans that are coupled with USDA loans for borrowers who need more than $5M (the SBA maximum loan limit).

What is the tangible net worth requirement?

TNW is calculated as All Assets – Intangible Assets (e.g., goodwill and/or intellectual property) – All Liabilities divided by All Assets – Intangible Assets. TNW is not a requirement for SBA loans.

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