A business loan in a rural area, made by a private lender, on which USDA Rural Development guarantees part of the lender's loss.
B&I is the USDA loan guarantee program for rural businesses, and its $25 million borrower limit is well above the $5,000,000 limit on an SBA 7(a) loan. As with SBA 7(a), a private lender makes and services the loan and the government stands behind part of it.
The rule’s main terms are these. The project must be in a rural area, which for this purpose means outside a city or town of more than 50,000 people and the urbanized area next to it. Eligible uses include buying and developing land and buildings, buying a business when jobs are created or saved, machinery and equipment, and working capital in the form of a term loan. The $25 million limit counts all B&I guaranteed loans to one borrower. The term may not exceed 40 years or the useful life of the assets, and balloon maturities are not allowed.
The guarantee percentage is not fixed in the rule. The maximum is 90 percent, and USDA announces each fiscal year’s percentage in the Federal Register. Check the current notice before you quote a figure to anyone.
How it shows up in the data here
USDA does not publish B&I loans lender by lender in a file this site uses, so a B&I loan is not marked here. Lenders active in federal guarantee programs often work in more than one: SBA 7(a) lenders by state shows who makes SBA guaranteed loans, and business lenders shows who holds business loan balances. Ask a lender directly whether it is a USDA lender.
Go further
- Business lenders by state: Lenders holding business loan balances.
- SBA 7(a) lenders by state: Lenders that made SBA 7(a) loans.
- What to do after a bank says no to a business loan: One bank's no is one lender's answer, and the reasons are yours to ask for. They usually point to a constraint you can name.
- SBA 7(a) or 504: which fits your loan: Both are SBA loans, and they work differently. The choice usually turns on what you are buying and how much cash you can put in.
Related terms
- SBA 7(a) loan: SBA's main business loan program. A lender makes the loan and SBA guarantees part of it: up to 85 percent of $150,000 or less and 75 percent of more, on loans up to $5,000,000.
- FSA guaranteed loan: A farm loan made and serviced by a bank, credit union or Farm Credit lender, on which the USDA Farm Service Agency covers most of the lender's loss if the borrower defaults.
- SBA guaranty percentage: The share of a 7(a) loan that SBA guarantees to the lender: up to 85 percent of a loan of $150,000 or less, up to 75 percent of a larger loan, and 50 percent on SBA Express.
- Term loan: A business loan for a set amount with a maturity of more than one year, repaid on a fixed schedule from the company's cash flow.
- Owner-occupied commercial real estate: Commercial property where the loan is repaid mainly by the business that occupies it, not by rent from unrelated tenants.
- Equipment financing: A loan used to buy business equipment, secured by that equipment and repaid over a term tied to how long the equipment will be useful.
Sources
- 7 CFR 5001.406, Guaranteed loan amounts, retrieved .
- 7 CFR 5001.407, Percentage of loan guarantee, retrieved .
- 7 CFR 5001.3, Definitions (rural and rural area), retrieved .
- 7 CFR 5001.105, Eligible B&I projects and requirements, retrieved .
- 7 CFR 5001.402, Term length, loan schedule, and repayment, retrieved .
- 13 CFR 120.151, statutory limit for total loans to a borrower (SBA 7(a)), retrieved .
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.