Program Description

The Business & Industry (B&I) Guaranteed Loan Program provides a government guarantee to lenders for their loans to businesses located in rural communities. The purpose of the B&I program is to improve, develop, or finance business, industry, and employment and improve the economic and environmental climate in rural communities.

Loan proceeds may be used by the borrower for:

  • 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 new jobs will be created and other conditions are met
  • Business and industrial acquisitions when the loan will keep the business from closing and/or save or create jobs.

Interest rates and loan terms are negotiated between the borrower and lender prior to submitting an application to USDA Rural Development. The USDA guarantee is a credit enhancement to the lender that may allow them to provide a longer amortization term or lower interest rates to the borrower.

More information on the B&I guaranteed loan program may be found at: http://www.rd.usda.gov/programs-services/business-industry-loan-guarantees

General Program Requirements

A borrower may be a cooperative organization, corporation, partnership, or other legal entity organized and operated on a profit or nonprofit basis; an Indian tribe on a Federal or State reservation or other Federally recognized tribal group; a public body; or an individual.

The borrower must be credit worthy and meet the program's tangible balance sheet equity (TBSE) requirements at loan closing. Existing businesses must have a minimum of 10 percent TBSE; new businesses are required to have a minimum of 20 percent TBSE. The loan's collateral, on a discounted basis, must be at least equal to the loan amount.

An eligible lender is any Federal or State chartered bank, Farm Credit Bank, other Farm Credit System institution with direct lending authority, Bank for Cooperatives, Savings and Loan Association, or mortgage company that is part of a bank-holding company. These entities must be subject to credit examination and supervision by either an agency of the United States or a State.

Non-regulated lenders must demonstrate sufficient lending expertise and financial strength to operate a successful lending program and apply to USDA Rural Development to become an eligible lender.

Your Next Steps

The following information will lead you to the next steps to apply for this program.

Application Process

The application for a B&I program guarantee is submitted jointly by the borrower and lender to a local Rural Development office after the loan terms for the project have been negotiated and agreed upon between parties.

B&I Program applications can be found online at: http://www.rd.usda.gov/publications/regulations-guidelines

A list of Rural Development office locations can be found at: http://www.rd.usda.gov/browse-state

Program Contact Information

David Chestnut
Loan Processing Specialist
david.chestnut@wdc.usda.gov
202-401-0158

Additional Information

Catalog of Federal Domestic Assistance (CFDA) Number1.768
Current Method of Tribal EligibilityProgram not specific to American Indians and Alaska Natives, but they are eligible
Can the funding from the program be renewedNo
Funding TypeDiscretionary
Entities Eligible for Grant AssistanceFederally Recognized Tribes and Tribal Organizations, Non-Tribal Entities
Matching Funds RequiredYes
Number of People Served by this Program (Approximate)The B&I Guaranteed Loan Program has annually guaranteed over $1 billion in business loans for projects located in rural communities, assisting over 400 businesses and creating or saving thousands of jobs.
Length of Programnot applicable
Recurring Base Funding for TribesNo

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