Rural Development Business & Industry (B&I) Program

GPDI, as a part of its commitment to economic development, packages B&I Guaranteed Loan applications on behalf of private lenders in its 28 county area of operations. The B&I program is similar to the SBA’s 7(a) Guaranteed Loan Program, but eligible projects must be located in communities with populations of less than 50,000. The major benefit to rural lenders involves the loan guarantee limits. The B&I loan guarantee limits exceed the maximum limits of the SBA 7(a) program.

Eligibility

  • Any legal entity
  • There are no size restrictions
  • Feasibility study prepared by a disinterested third party required for startup businesses. Feasibility study must include:
    • Economic feasibility
    • Market feasibility
    • Technical feasibility
    • Financial feasibility
    • Management feasibility

Projects Financed

  • Business and real estate acquisition
  • Construction and improvements
  • Purchase of machinery and equipment
  • Working capital, inventory, accounts receivable
  • Pollution control and abatement
  • Business start-ups
  • Refinancing under certain conditions

Loan Amount

  • Loan guarantees are limited to a maximum of $10 million per borrower, although RD may approve requests up to $25 million.
  • 80% loan guarantee up to $5 million
  • 70% over $5 million to $10 million
  • 60% over $10 million to $25 million

Interest Rate/Fees

  • Interest rate determined by the private lender
  • GPDI Origination Fee – up to 1% of the loan amount (paid by the applicant)
  • Guaranty Fee – 2% of guaranteed portion (Lender may pass this fee on to the borrower by either direct billing or in the loan proceeds)
  • Annual Service Fee – 0.5% paid at end of calendar year on principle balance (Lender pays, this fee can only be passed on to the borrower through the interest rate and not directly billed)

Repayment

  • Working capital – 7 years
  • Machinery and Equipment – 15 years (or useful life)
  • Real estate – 30 years

Collateral

  • Usually the assets financed with the loan proceeds. Personal and corporate guarantees are required.

The B&I Guarantee Loan Program promotes economic development in rural communities. The goals of the program are to create and maintain employment and improve a small business’ access to capital. The B&I program is administered by the Rural Business-Cooperative Service of USDA-Rural Development.