Program 101

Fact Sheet

Are Applications Being Accepted? YES

What does this program do?
This program bolsters the availability of private credit by guaranteeing loans for rural businesses.

Who may apply for this program?
Lenders with the legal authority, sufficient experience and financial strength to operate a successful lending program. This includes:

  • Federal or state-chartered banks
  • Savings and loans
  • Farm credit banks
  • Credit unions

What kind of businesses qualify for loan guarantees?

Are there restrictions on the borrower?

  • 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.

What is an eligible area?

  • Any area other than a city or town with a population of greater than 50,000 inhabitants and the urbanized area of that city or town
  • The borrower’s headquarters may be based within a larger city as long as the project  is located in an eligible rural area
  • The lender may be located anywhere
  • Projects may be funded in rural and urban areas under the Local and Regional Food System Initiative

Check eligible addresses for Business Programs

How may funds be used?
Eligible uses include but are not limited to:

  • Business conversion, enlargement, repair, modernization or development
  • Purchase and development of land, easements, rights-of-way, buildings or facilities
  • Purchase of equipment, leasehold improvements, machinery, supplies or inventory
  • Debt refinancing when refinancing improves cash flow and creates or saves jobs
  • Business and industrial acquisitions when the loan will create or save jobs

Guaranteed loan funds MAY NOT be used for:

  • Lines of credit
  • Owner-occupied housing
  • Golf courses
  • Racetracks or gambling facilities
  • Churches, church-controlled organizations or charitable organizations
  • Fraternal organizations
  • Lending, investment and insurance companies
  • Projects involving more than $1 million and the relocation of 50 or more jobs
  • Agricultural production, with certain exceptions (1)
  • Distribution or payment to a beneficiary of the borrower or an individual or entity that will retain an ownership interest in the borrower

What Collateral Is Required?
Collateral must have documented value sufficient to protect the interest of the lender and the Agency. The discounted collateral value must be at least equal to the loan amount. Lenders will discount collateral consistent with sound loan-to-value policy. Hazard insurance is required on collateral (equal to the loan amount or depreciated replacement value, whichever is less).

Maximum Advance Rates
Real Estate: 80 percent of fair market value
Equipment: 70 percent of fair market value
Inventory: 60 percent of book value (raw inventory and finished goods only)
Accounts Receivable:  60 percent of book value (less than 90 days)

What is the maximum amount of a loan guarantee?

  • 80 percent for loans of $5 million or less
  • 70 percent for loans between $5 and $10 million
  • 60 percent for loans exceeding $10 million, up to $25 million maximum

What are the loan terms?

  • Maximum term on real estate is 30 years
  • Maximum term on machinery and equipment is its useful life or 15 years, whichever is less
  • Maximum term on working capital not to exceed 7 years
  • Loans must be fully amortized; balloon payments are not permitted
  • Interest-only payments may be scheduled in the first 3 years

What are the interest rates?

  • Interest rates are negotiated between the lender and borrower, subject to Agency review
  • Rates may be fixed or variable
  • Variable interest rates may not be adjusted more often than quarterly

What are the applicable fees?

  • There is an initial guarantee fee equal to 3 percent of the guaranteed amount
  • There is an annual renewal fee, currently 0.5 percent of outstanding principal (2)
  • Reasonable and customary fees are negotiated between the borrower and lender

What are the underwriting and security requirements?

  • The proposed operation must have a realistic repayment ability
  • New enterprises may be asked to obtain a feasibility study by a recognized independent consultant
  • The business and its owners must have a good credit history
  • At loan closing/project completion, the business must have a tangible balance sheet equity position of:
    • 10 percent or more for existing businesses, or
    • 20 percent or more for new businesses.
  • Key person life insurance may be required and the amount negotiated. A decreasing term life insurance is acceptable
  • Personal and corporate guarantees are normally required from all proprietors, partners (except limited partners) and major shareholders (i.e., all those with a 20 percent or greater interest)

How do we get started?

Who can answer questions?
Contact the local office that serves your area.

What governs this program?

  • Loan Processing – Code of Federal Regulations, 7 CFR 4279-A and B
  • Loan Servicing – Code of Federal Regulations, 7 CFR 4287-B
  • This program is authorized by the Consolidated Farm and Rural Development Act

Why does USDA Rural Development do this?
This program improves the economic health of rural communities by increasing access to business capital through loan guarantees that enable commercial lenders to provide affordable financing for businesses in eligible rural areas.

NOTE: Because citations and other information may be subject to change, please always consult the program instructions listed in the section above titled "What Governs this Program?" You may also contact your local office for assistance.

(1) Production agriculture is eligible only if the project is vertically integrated, ineligible for USDA Farm Service Agency (FSA) farm loan guarantees, and agricultural production as part of the loan is both secondary (less than 50 percent of the business) and less than $1 million. Nursery, forestry and aquaculture operations are eligible without these restrictions.

(2) The annual renewal fee is currently one-half of one percent (.5%) of the outstanding principal loan balance as of December 31st. The renewal fee rate is set annually by Rural Development in a notice published in the Federal Register. The rate in effect at the time the loan is made will remain in effect for the life of the loan. Annual renewal fees are due on January 31. Payments not received by April 1 are considered delinquent and, at the Agency discretion, may result in cancellation of the guarantee to the lender. Holders’ rights will continue in effect as specified in the loan note guarantee and assignment guarantee agreement. Any delinquent annual renewal fees will bear interest at the note rate and will be deducted from any loss payment due the lender. For loans where the loan note guarantee is issued between October 1 and December 31, the first annual renewal fee payment will be due January 31 of the second year following the date the loan note guarantee was issued.

Forms & Resources

NOTE: If state-specific forms are not shown above, please refer to the application materials listed below to start the process of applying. Please ensure that your state is selected in the dropdown menu above to find the State Office contact information for this program and speak to a Business Programs Specialist before attempting to fill out any forms or applications. This will save you valuable time in the process.

Preliminary Actions Required

To complete an application for this program, you must be pre-registered with the System for Award Management (SAM) and also have a Data Universal Number System (DUNS) number. Neither of these applications cost money, but they can take time so be sure to get this taken care of right away. If you are already registered with these systems, you do not need to do it again.





Tangible Balance Equity Calculator (docx)



Special Alert for SAM registrants

Last year, we alerted our vendor community to third-party companies offering to help you update information contained within the System for Award Management ( website, for a fee. Your SAM registration contains sensitive business information, including your banking information and other sensitive information, so your login and password should not be shared with anyone outside your company. As a reminder, the use of the System for Award Management website is free to use and update, and the Commodity Procurement Staff does not see a reason to pay anyone to provide that service. 

Secondly, we have just become aware of a couple of scam emails that offer to “help companies start the renewal process online” or suggest that “Your Federal Profile is Almost Complete. Immediate Action Required!” In both cases, your free access to will resolve any questions you may have regarding your registration in As you know, requires an annual recertification and sends out email reminders prior to the expiration, and again, updates should be handled by company employees. Furthermore, if your registration is not complete, you may login to to make that determination for yourself. 

Please remember that is not affiliated with the USDA and is a government-wide website not maintained by our Agency. If you have any questions regarding access or how to use SAM, please contact their help desk at 866-606-8220, option #1.


There are no engineering requirements at the national level, however, some states have additional requirements.


Rural Development environmental requirements can be found here: RD 1970 Environmental Policies and Procedures. Benefits of the 1970 environmental regulations are described here: 7 CFR 1970 Benefits.


USDA Rural Development (RD), has drafted a Nationwide Programmatic Agreement (NPA) to address sequencing of RD’s responsibilities under Section 106 consultation as required by the National Historic Preservation Act (NHPA).  Under the existing regulations, RD must complete Section 106 consultation prior to approval of financial assistance, commonly referred to as obligation. The NPA would allow RD to obligate funds prior to completion of Section 106, but before funds are awarded and before construction begins.  This will allow RD to conduct meaningful consultation with states, tribes, industry, and other consulting parties at the time when project and site specific information is available and adverse effects to historic properties can be appropriately mitigated and avoided and to ensure the timing of RD’s obligation and environmental review is coordinated, predictable, and transparent.


Rural Development (RD) is reaching out to interested parties as we begin nationwide consultation on the proposed programmatic agreement.  RD has developed a YouTube video with slides and audio available, following is the URL: video provides information on the three agencies under RD, the need for an efficiency to address Section 106 sequencing, RD’s efforts to develop the NPA draft to date, and walks step by step through the parts of the draft NPA.  A transcript is available directly below the video by clicking on the "More" tab. We have also attached the draft NPA and a series of fact sheets, including information about our grant and loan programs specific to tribes.  You can find more information about the NPA and our program here as well.


In order to facilitate discussion and gather stakeholder comments, questions, and concerns about the draft NPA, RD has scheduled a series of listening sessions for State Historic Preservation Officers (SHPOs), Tribal Historic Preservation Officers (THPOs), and Industry to discuss the information presented in the video.  The dates, times, call-in number and passcode, information about accessibility accommodations, and RD contact information are as follows:


SHPO Listening Session

If your SHPO office is located in the following states, territories or commonwealths, your listening session is scheduled for, Monday March 5th, 2018 at 01:00 pm EST.

· MT, ID, WY, UT, CO, NM, and AZ.


THPO Listening Session

If your THPO Office or area of tribal interest is located in the following states, territories or commonwealths, your listening session is scheduled for, Monday February 26th, 2018 at 01:00 pm EST.

· MT, ID, WY, UT, CO, NM, and AZ.


Call-in Information

Please note that the listening sessions will be recorded to ensure that we accurately collect all questions and comments.

Conference Line Audio & Web Primary Access Information

USA Toll-Free: 888-844-9904

USA Caller Paid: 816-423-4261

For Other Countries:

Access Code: 7731151



If you need further accommodation for the listening sessions, please notify Dr. Erika Martin Seibert, at the phone number or email address provided below at least 48 hours before the start of the listening session.


Agency Contacts

Rural Business-Cooperative Service (RBS)

Kelsey Owens–Federal Preservation Officer/Environmental Protection Specialist

Phone: 202.205.8242/ E-mail:

Rural Housing Service (RHS)

Peggy Wade – Federal Preservation Officer/ Senior Environmental Protection Specialist

Phone: 202.875.3572/ E-mail:

Rural Utilities Service (RUS)

Erika Martin Seibert, Ph.D. – Federal Preservation Officer/ Archaeologist

Phone: 202.260.9099/ E-mail:


Listed is the URL where you will find a copy of the 508 RD NPA Section 106 Final Draft -



Individual states may have particular requirements based on state and local regulations. Please contact the state office in the state where your project is located.

The State Environmental Coordinator assists all Rural Development program staff, applicants, owners, and other concerned parties in meeting the Agency requirements for compliance with the National Environmental Policy Act, The National Historic Preservation Act, and other laws governing the protection of environmental and cultural resources. For more information please contact the Rural Development loan specialist servicing your area using the following link Colorado Office Contacts or the RD State Architect: Thom Sakata (720) 544-2912, or email You can also visit the following sites for a complete overview:

  • CFR Part 1500 USDA Rural Development Environmental Compliance Library Council on Environmental Quality - Regulation for Implementing the Procedural Provisions of the National Environmental Policy Act
  • The USDA RD Colorado Environmental Resource Directory provides useful links to local environmental data, research tools and expert agency contacts:

Interest Rates

Interest rates are negotiated between the lender and borrower, subject to Agency review. They may be fixed or variable, and variable interest rates may not be adjusted more often than quarterly.


Business and Industry (B&I)
Jaki Polich – 970-529-8369

Listed are other program contacts (by specialists and program)

Intermediary Re-lending Program Loans (IRP)
P.J. Howe – 970-329-3151

Renewable Energy & Energy Efficiency Grants (Energy)
Donald Nunn – 720-544-2907

Rural Business Enterprise Grants (RBDG)
P.J. Howe – 970-329-3151

Rural Cooperative Development Grants (RCDG)
Cindy Chadwick – 720-544-2924

Rural Economic Development Loans (REDL) and Grants (REDG)
Donald Nunn – 720-544-2907

Small Socially Disadvantaged Producer Grant (SSDPG)
Cindy Chadwick – 720-544-2924

Value-Added Producer Grants (VAPG)
P.J. Howe – 970-329-3151