Explanation of USDA B&I


Eligible Areas

  • Projects financed under the B&I program must be located in the United States or its possessions/territories and must be in a rural area (defined as having a population of less than 50,000).

 

Eligible Borrowers

  • Any legal entity including individuals, public and private organizations and federally recognized Indian tribal groups
  • There is no size restriction on the business

 

Use of Proceeds

  • B&I Loans may involve acquisitions, construction, conversion, repair, modernization or debt refinance.
  • Loan proceeds can be used for real estate acquisition and/or improvements, machinery, equipment, furniture, fixtures and working capital. Closing costs and guarantee fees are also eligible.

 

Borrower Equity Requirements

  • For existing businesses: a minimum of 10% tangible balance sheet equity is required at the time of issuance of the Loan Note Guarantee
  • For start-up businesses: a minimum of 20% tangible balance sheet equity is required at the time of issuance of the Loan Note Guarantee
  • Equity is determined in accordance with Generally Accepted Accounting Principles (GAAP)

 

Terms

  • All B&I loans are fully amortized with no balloons or call dates.
  • Maximum repayment terms are up to 30 years for real estate and improvements, up to 15 years (or useful life) for machinery, equipment, furniture and fixtures and up to 7 years for working capital.
  • Rates are based on a spread over the Prime Lending Rate. Rates vary depending on the specific strengths of the transaction.
  • A one-time Guarantee Fee of 2% of the guaranteed principal amount is due to USDA at loan closing. Other customary fees also apply.