USDA Loans


Need a USDA Loan for a commercial property in small towns of less than 50,000 populations?

Call John Caperton or email him at

The USDA Business and Industries Loan (B & I Loan) Program is a Federal loan guarantee program that is designed to encourage the commercial financing of rural businesses. The reason why the Federal government is involved is because it wants to create and save rural jobs and improve the economic and environmental climate of rural communities.

Here's what makes a B&I loan different: The Business & Industry Loan program is lender-driven. The USDA guarantees the loan rather than lending directly. A commercial lender requests the B & I guarantee, and, if it is approved, the commercial lender makes and services the loan.

The benefits of the B & I Guaranteed Loans Program for businesses is that the borrower gets a higher loan amount. The reason why is because the guarantee strengthens the loan application, allowing the bank to feel comfortable with a smaller equity injection.
B&I loans also offer lower interest rates and longer repayment terms. This greatly assists businesses that may not qualify for conventional commercial real estate financing, which provides the rural business greater stability and leads to greater growth, expansion and rural employment.

Below is a list of the authorized uses of the loan funds. A borrower must be engaged in, or proposing to engage in, a business that will (1) Provide employment; (2) Improve the economic or environmental climate; (3) Promote the conservation, development, and use of water for aquaculture; or (4) Reduce reliance on nonrenewable energy resources by encouraging the development and construction of solar energy systems, and other renewable energy resources.

Authorized Loan Purposes:

• Business and industrial acquisitions, construction, conversion, expansion, repair, modernization or development costs
• Purchase of equipment, machinery or supplies.
• Start-up costs and working capital.
• Processing and marketing facilities.
• Pollution control and abatement.
• Refinancing for viable projects, under certain conditions.
• Purchase of start-up cooperative stock for family sized farms where commodities are produced to be processed by the cooperative.
• Bottom line, the USDA Building and Industry Loan (B&I Loan) program is a terrific program if the commercial property is located in a town of less than 50,000 residents.
• A great many small motels are financed using the B&I loan program.


The USDA itself does not make loans. The USDA does set minimum eligibility requirements for B&I loans. There are three main eligibility requirements:

1. Your business must be located in a rural area.

The USDA defines rural area as an area with fewer than 50,000 inhabitants. Your main office can be located anywhere, as long as the project you’re funding with the loan proceeds is in a rural area.

To find out if your town is in an eligible area, contact John Caperton at

2. Good credit history.

Banks typically work with borrowers who have a FICO score of at least 680. If you don’t know your latest credit score. If your business is already up and running, it should also have a good credit score.

3. Tangible balance sheet equity of at least 10 % (20 % for startups) at loan closing.

Tangible equity is comprised of things like equipment, real estate, and cash. Intangible assets such as goodwill and trademark rights do not count. You should use a pro forma balance sheet when making this calculation, meaning that the B&I loan you’re applying for should be included as a liability.

Contact John Caperton at or call 888-640-3444 for more information.


USDA business loans can be used for a variety of business purposes, including the following:

· Investment properties (Do not have to be owner occupied as with SBA)
· Business conversion, renovation, and modernization
· Purchase of commercial real estate, buildings, or other commercial facilities
· Purchase of equipment, machinery, or commercial leasehold improvements
· Purchase of supplies or inventory
· Startup costs and working capital
· Debt refinancing when new jobs will be created by your project
· Business and industrial acquisitions when the loan will keep the business from closing or will save or create jobs
Loans cannot be used for charitable organizations, religious institutions, lending or insurance businesses, and golf courses and race tracks.

Terms on USDA Business & Industry Loans
Many of the terms on USDA Business Loans are negotiated between the bank making the loan and the borrower. However, since the USDA guarantees repayment on a portion of the loan, the terms are typically quite favorable for borrowers. In addition, the USDA does set certain guidelines that banks have to follow.

Loan Amounts

The maximum you can borrow is usually $10 million (it’s higher for certain types of projects). There’s no set minimum, but there are limits on how much you can borrow based on the value of your project and what you’re using the loan funds for. The maximum loan-to-value cannot exceed the following:
· 80 % for real estate
· 70 % for equipment
· 60 % for accounts receivable and inventory

For example, if you’re planning to use the USDA loan to buy tractors that have an appraised value of $100,000, the maximum loan you can receive is 70 % of that amount, or $70,000.

Interest Rates

In general, interest rates on USDA loans track and bank loans, so they are typically around 5-9 %. Interest rates for USDA business loans may be fixed or variable. The rate is negotiated between the lender and the borrower and may not be higher than rates ordinarily charged for similar loans. The USDA will review the interest rate to make sure it’s not unreasonably high. If the loan has a variable rate, the rate cannot be adjusted more frequently than every quarter.


Monday9:00AM - 6:00PM
Tuesday9:00AM - 6:00PM
Wednesday9:00AM - 6:00PM
Thursday9:00AM - 6:00PM
Friday9:00AM - 6:00PM
Saturday12:00PM - 5:00PM


Email, Give Us A Call Or Send Us A Fax



Toll Free: 888-640-3444

E-fax: 866-257-9609