What is the USDA B&I Loan Guarantee Program?

The Department of Agriculture Business & Industry (USDA B&I) Loan Guarantee Program is a U.S. government development financing mechanism similar to the SBA Loan programs. The government does not give the loan directly but offers guarantees that enable banks to provide the loan. The key difference is that for the USDA B&I Loan program, the business must be located in a rural area, because the purpose of the program is to save and create jobs in rural America.

Who may qualify for the program?

Most types and sizes of businesses located in a USDA eligible rural area may qualify, including those in our focus areas:

Healthcare Hospitality Life Sciences

  • Hospitals, Pharmacies etc.
  • Skilled Nursing Facilities
  • Professional Buildings etc.


  • Hotels/Motels/Resorts
  • Restaurants
  • Vineyards, Wineries

Life Sciences

  • Laboratories
  • Manufacturing Facilities
  • Clinical Research

What is a USDA eligible rural area?

These are rural areas outside of a city or town with a population of less than 50,000 people. Your business may be located in a larger city as long as the project itself is in an eligible rural area.

What can USDA guaranteed loan funds be used for?

Some of the eligible uses of the funds are:

  • Purchase and development of land; construction of buildings or facilities.
  • Purchase of equipment, machinery, supplies or inventory
  • Modernization, enlargement, development, business conversion and leasehold improvements.
  • Debt refinancing provided that refinancing will improve cash flow and create jobs.
  • Business and industrial acquisitions that will maintain operations and create or save jobs.

How much can my business borrow?

The loan amounts range from $200,000 to $25 million and vary by the lender. How much you can borrow depends on the type and value of the business assets (collateral) you have. The discounted collateral value must be at least equal to the loan amount.

You can borrow up to 80 percent of fair market value of Real Estate.
You can borrow up to 70 percent of the fair market value of Equipment and Machinery.
You can borrow up to 60 percent of the book value of Inventory.
You can borrow up to 60 percent of the book value of Accounts Receivable.

Hazard insurance, equal to the loan amount or depreciated replacement value, whichever is less, is required on the collateral offered.

What is the maximum amount of a USDA loan guarantee?

The USDA guarantees:

80 percent of loans up to $5 million.
70 percent of loans between $5 and $10 million.
60 percent of loans between $10 million and $25 million.

Anyone with more than 20% of equity in your business is required to personally guarantee the rest.

What are the interest rates?

Government backed business loans tend to come with highly competitive rates. The interest rates may be fixed or variable and are negotiated with the lender but subject to USDA review.

What are the terms of the loan?

  • The terms of the loan vary depending on the use of the funds, e.g.:
    Real Estate: 30 Years
  • Machinery and Equipment: 15 years or the useful life of the equipment, whichever is less.
  • Working Capital: 7 years.

The Loans must be fully amortized meaning that repayments are the same amount each month. Balloon payments are not permitted so you will not have to make a large payment at the end. Interest-only payments may be scheduled in the first 3 years.

What are the benefits of the USDA B&I loan program?

  • Competitive rates. The loans are guaranteed by the U.S. Government, collateral and owners with more than 20% stake, so there is less risk of default. The lender can therefore offer competitive rates.
  • Less competition than SBA loans. There is a smaller pool of applicants in eligible areas
  • Up to $25 Million in financing for eligible businesses
  • Available to Startups. The USDA B&I loan can be used to start a new business.

Eligibility Checklist

1. Are you a United States citizen or lawful Permanent Resident of the United States?
2. Do you have a healthcare, life science or hospitality project located in a town with 50,000 or fewer residents? You can check the eligibility of your project by entering the property site address here: Check USDA Eligible Rural Area Address
3. Is your business entity a partnership, sole proprietorship, cooperative, for-profit or nonprofit corporation, publicly traded company or federally recognized tribal group?
4. Can you demonstrate that the loan funds will remain in the United States and the facility being financed will positively impact the local economy, create new employment opportunities or save existing jobs.
5. Do you and your business have very good/excellent credit (min FICO 680) and a strong credit history?
6. Can you provide collateral for the loan?
7. Do you have or can you show projections for consistent revenue to repay the loan?
8. Do you have a tangible balance sheet equity position of at least 20% for a new business or 10% for an existing business?
9. Are you willing to provide personal guarantees from all owners, individuals or entities, with at least a 20% ownership stake in the business?

If you answered ‘Yes’ to all or most of the questions, please contact us to get the process started. The USDA lending process, as with other government-backed loans, comes with more documentation and research than most other business loans.

This is where we, LaGray Finance, come in. We work with you right from the start to make an otherwise stringent process look smooth and easy. LaGray Finance partners with you to put together an application package that ensures success in the end.