USDA Business & Industry (B&I) Loan Guarantee
USDA Rural Development
Up to $25,000,000
USDA-backed loans for rural business growth
Federal loan guarantee program that enables rural businesses to access commercial financing they couldn't otherwise obtain. USDA Rural Development guarantees 60–80% of commercial loans made by approved lenders to rural businesses — covering virtually any business purpose including working capital, equipment, real estate, and business acquisition. The program targets rural areas (outside cities of 50,000+) and is designed to create and preserve jobs in underserved rural communities. Loans up to $25M; the 80% USDA guarantee for loans up to $5M makes lenders willing to finance rural projects with non-traditional collateral.
- Funding type
- Loan
- Level
- Federal
- Amount range
- $1,000 – $25,000,000
- Realistic amount
- Most B&I borrowers access $500,000–$5,000,000 where the 80% guarantee makes the most meaningful difference vs. conventio…
- Deadline
- Rolling — no application deadlines. Lenders can submit B&I applications to USDA Rural Development at any time.
- Status
- active
- States
- Nationwide
- Payment model
- lump sum
Who qualifies
- Business must be located in a rural area (outside urbanized areas of 50,000+) — verify with local USDA RD state office
- For-profit businesses, nonprofits, cooperatives, federally-recognized tribes, and public bodies (municipalities, counties) are all eligible entity types
- Citizens, permanent residents, and legal entities where principal owners are citizens or permanent residents
- Individuals, partnerships, corporations, cooperatives, agricultural cooperatives, and for-profit hospitals
- Must demonstrate the loan will create or save rural jobs, or provide essential community services
- Borrower must demonstrate the project can't be financed without the guarantee at reasonable terms (credit elsewhere test)
- Key businesses NOT eligible: golf courses, racetracks, gambling establishments, churches or religious instruction, fraternal or lodge facilities, federal or state agency programs with conflicting assistance, or projects producing pornographic material
Hard requirements
- Requires federal certification:
- Rural location required
What it covers
Eligible expenses
- Working capital for operations, payroll, accounts payable, inventory
- Purchase of business equipment, machinery, and technology
- Purchase, construction, or renovation of owner-occupied commercial real estate
- Business acquisition (entire business or controlling interest)
- Refinancing existing debt if the refinance improves cash flow and creates or saves jobs (limited)
- Agriculture-related processing facilities (grain elevators, packing plants, cold storage)
- Renewable energy and energy efficiency projects in rural areas
- Rural healthcare facilities (clinics, hospitals, nursing homes)
- Rural childcare centers, eldercare facilities, educational facilities
- Tourism and hospitality projects in rural areas (hotels, restaurants, recreational businesses)
Ineligible expenses
- Projects primarily serving urbanized areas with populations over 50,000
- Golf courses, racetrack facilities, or gambling operations
- Churches, religious instruction, or facilities primarily for religious purposes
- Fraternal organizations or lodges
- Projects owned by federal or state government (some exceptions for public utilities)
- Investor-owned real estate speculation or non-owner-occupied rental properties
- Lines of credit (B&I must be a term loan or operating loan, not a revolving credit facility)
- Costs already incurred before USDA Conditional Commitment (retroactive coverage not allowed)
How to apply
-
1
Confirm rural location eligibility
Use USDA RD's Rural Eligibility Map (eligibility.sc.egov.usda.gov) to verify the project address is in an eligible rural area. If the address is borderline, contact the USDA Rural Development state office to confirm — USDA uses current census data, and some areas recently classified as urban may still qualify under grandfathering provisions.
~1 hrs
-
2
Find a USDA-approved B&I lender
B&I loans must be originated by a USDA-approved commercial lender — banks, credit unions, insurance companies, and CDFIs all participate. Many regional agricultural banks and Farm Credit institutions have B&I experience. Contact your USDA Rural Development state office for a referral list. The lender drives the process; USDA reviews the lender's package.
~3 hrs
-
3
Lender prepares and submits B&I application to USDA
The lender collects all borrower information and prepares the full B&I application package for USDA. Required information: business plan, feasibility study (often required for startups), 3 years financial statements (or tax returns), personal financial statements for 20%+ owners, environmental review, credit analysis, appraisals, and job creation/retention projections. The lender submits to the USDA RD state office.
~30 hrs
-
4
USDA reviews and issues Conditional Commitment
USDA RD state office (or Washington for loans >$10M) reviews the package for program eligibility, rural area qualification, environmental compliance, and loan quality. USDA issues a Conditional Commitment letter listing remaining conditions before guarantee issuance. Processing: 30–90 days for most loans; 90–180 days for complex or large loans.
~5 hrs
-
5
Satisfy conditions, close loan, and USDA issues guarantee
After satisfying all conditions (appraisals, environmental clearance, title insurance, flood certification, insurance), the lender closes the loan. USDA issues the Loan Note Guarantee upon closing. Funds are disbursed by the lender — typically a combination of construction draws and operating capital draws for complex projects.
~5 hrs
A feasibility study prepared by an independent third party substantially increases USDA's confidence in the project — especially for rural manufacturing or food processing startups. Budget $5,000–$20,000 for a credible feasibility study; it pays back in faster USDA approval.
Deadline & timing
B&I is a rolling program. Unlike competitive USDA grant programs, B&I has no annual NOFO or intake window — lenders submit applications to the local USDA Rural Development state office when a borrower's package is complete. However, USDA processing capacity varies by state office staffing, and some offices have multi-week queues. Complex loans over $10M require Washington-level review and take longer.
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Last reviewed 2026. GrantCompass is an independent funding-discovery tool and is not affiliated with any government agency. Always confirm details on the official program page.