Are Applications Being Accepted? Yes.
Program Fact Sheet: PDF
- Federal or state-chartered banks.
- Savings and loans.
- Farm credit banks.
- Credit unions.
- For-profit businesses.
- Federally-recognized Tribes.
- Public bodies.
- 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.
- Rural areas outside of a city or town with a population of fewer than 50,000 people.
- 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 in the United States.
- Projects may be funded in rural and urban areas under the Local and Regional Food System Initiative. Check eligible addresses for Business Programs.
- Business conversion, enlargement, repair, modernization or development.
- The purchase and development of land, easements, rights-of-way, buildings or facilities.
- The purchase of equipment, leasehold improvements, machinery, supplies or inventory.
- Debt refinancing when refinancing improves cash flow and creates jobs.
- Business and industrial acquisitions when the loan will maintain business operations and create or save jobs.
- Lines of credit.
- Owner-occupied and rental 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.
Maximum Discounted Value
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).
- 80 percent for loans up to $5 million.
- 70 percent for loans between $5 and $10 million.
- 60 percent for loans exceeding $10 million, up to $25 million maximum.
- Maximum term on real estate is 30 years.
- Maximum term on machinery and equipment is for its useful life or 15 years, whichever is less.
- Maximum term on working capital is 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.
- 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.
- There is an initial guarantee fee, currently 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.
- 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 or 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 (all those with a 20 percent or greater interest).
- Applications are accepted from lenders through USDA local offices year-round.
- Interested borrowers should inquire about the program with their lender.
- Lenders interested in participating in this program should contact the USDA Rural Development Business Programs Director in the state where the project is located.
- 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.