You Need More Than a Bank - You Need a USDA Specialist

The USDA B&I loan program helps rural businesses get the financing they need by providing a government-backed loan guarantee. This support encourages banks to lend to small businesses in rural areas with more favorable terms.

To qualify, the project must be located in a rural area—defined as any area outside of cities or towns with populations over 50,000, including their adjacent urbanized zones. While a business’s headquarters can be in a larger city, the project itself must take place in an eligible rural location.

To check if a project location qualifies, use the USDA’s official eligibility map: Check eligibility.

You can borrow up to $25 million through a USDA B&I loan. In some cases, if combined with other USDA or SBA loans, the total project financing can be even higher.

Government-guaranteed loan funds can support a wide range of business needs. Eligible uses include business development, expansion, modernization, or repairs. Funds can also be used to purchase and improve land or buildings for commercial use, buy and install equipment or inventory, refinance existing debt to improve cash flow, or acquire a business when it helps preserve operations and support job creation.

Loan funds can’t be used for certain purposes. These include lines of credit, residential or rental housing, golf courses, racetracks, or gambling facilities. They're also not allowed for churches or church-controlled organizations, fraternal groups, lending or insurance companies, most agricultural production (with some exceptions), or for making payments to business owners or stakeholders who retain ownership in the company.

Loan terms depend on how the funds are used:

• Real estate loans: up to 30 years

• Equipment loans: up to 15 years or the equipment’s useful life

• Working capital: 7 to 10 years, based on the collateral’s useful life

Unlike many conventional loans, USDA B&I loans are fully amortizing (no balloon payments), which means predictable payments over the life of the loan.

The USDA guarantees a portion of the loan, which reduces the risk for the bank. This guarantee helps businesses that might not otherwise qualify for traditional loans. There is a one-time USDA fee included in the loan.

Interest rates are negotiated between the borrower and the lender and can be either fixed or variable. If a variable rate is used, it cannot adjust more than once per quarter. Loan terms vary based on the project but cannot exceed 40 years.

Yes:

• Borrowers must be U.S. citizens or permanent residents.

• Loan funds must be used in the U.S. and the project should create or save jobs for rural residents.

Eligible rural areas generally exclude cities or towns with more than 50,000 people and their surrounding urbanized zones. However, some cooperative and local food projects may qualify in urban areas. The borrower’s headquarters can be in a larger city if the project is located in a rural area.

Both SBA 7(a) and USDA B&I loans offer government guarantees, but USDA B&I loans focus specifically on rural businesses. They have different fee structures, loan limits, and USDA works closely with lenders through local offices and loan specialists throughout the process.

Yes. USDA must ensure projects meet environmental standards under federal law. The complexity of this review depends on the project’s size and scope.