The USDA provides a variety of commercial loan options in Florida to help rural entrepreneurs in the Sunshine State stimulate new business and create economic opportunity. The need for guaranteed business financing in Florida could not be greater. According to the most recent figures from the U.S. Census Bureau, from January 2021 to January 2022, Florida accounted for 683,680 of the 5.8 million applications for new businesses filed nationally, the most among any state and fourth highest when adjusted for population.
Being able to secure a business loan for a new business in Florida or anywhere else can be a make-or-break proposition for many entrepreneurs. The USDA’s One RD Guaranteed Loan Program not only offers financing for new businesses but also existing ones, providing funding for business acquisition, expansion, conversion, repair, acquisition, construction, equipment, supplies, and even working capital for debt restructuring. Here is more information about the OneRD Guaranteed Loan Initiative and the best loan options for Florida’s rural entrepreneurs.
Overview of the OneRD Guaranteed Loan Initiative
The OneRD Guaranteed Loan Initiative was launched by the U.S. government through the Department of Agriculture to support lending for rural business owners to improve economic prosperity in rural areas. Also known as the Rural Development Loan Program, it works by providing USDA-backed loan guarantees to lenders to encourage them to make commercial loans to credit-worthy rural borrowers. The program is available in Florida and all 50 states.
USDA business loans are similar to SBA 7a loans but with more attractive terms and higher loan amounts. They are available for all kinds of qualifying entities including for-profit and nonprofit businesses, new and existing businesses, individuals, partnerships, co-ops, franchises, public bodies, and federally recognized Native American tribes, among others.
Loan amounts range from $2 million to $25 million and more; up to $40 million for certain cooperatives and even $100 million for USDA Community Facilities Loans. Loan terms range from seven to 40 years depending upon loan use, and interest rates are highly competitive, tied to the Wall Street Journal Prime Rate.
Geographic eligibility is broad. The USDA defines “rural” as any town or city with 50,000 or fewer residents. In fact, 97% of the geographic USA fits this definition. In addition, companies with headquarters in larger metro areas also are eligible as long as the actual division or branch being financed is located within a qualifying area.
USDA Business Loans under the OneRD program are collateral-backed. Eligible borrowers must have a credit score of 680 or higher with a good payment history and be able to provide collateral (cash, real estate, or other tangible assets, set at a discounted value) on a 1:1 basis to the loan amount requested, in addition to other requirements.
USDA Business Loans in Florida | Three Top Options from North Avenue Capital
The USDA offers several guaranteed commercial loan options under the “OneRD” umbrella. Three of the best options for Florida entrepreneurs include Business & Industry (B&I) Loans, Community Facilities (CF) Loans, and Rural Energy for America Program (REAP) Loans. As America’s Rural Lender, North Avenue Capital services all three of these popular USDA business lending programs.
This is the best USDA business loan option for the broadest range of Florida businesses. The B&I Loan Program is the USDA’s core commercial lending program for all kinds of small, medium, and large businesses across hundreds of for-profit and nonprofit market sectors, everything from automotive dealers to business services and supplies, commercial construction, food and dining, healthcare, hospitality, home goods, manufacturing, legal and financial services, industrial, retail stores, and more.
Loan Amounts: $2 Million to $25 Million
Loan Terms: Seven years for working capital; 10 to 15 years for equipment; 30 years for real estate
Interest Rates: Set by the lender, can be fixed or variable, and are tied to the WSJ Prime Rate +1-3%.
Maximum Amount of Loan Guarantees: 80% for loan amounts less than $5 million, 70% for loan amounts $5 million-$10 million, and 60% loan amounts greater than $10 million
Additional fees: 2% application and guarantee fee
This program provides USDA-backed loans for more than 100 kinds of essential community facilities. Public bodies, nonprofit organizations, and federally recognized Native American Tribes can use CF loan funds to construct, expand or improve facilities that provide health care, education, public safety, and public services. Examples include fire stations, town halls, health clinics, hospitals, child care centers, assisted living facilities, rehabilitation centers, public buildings, schools, libraries, transportation facilities, and more.
Loan Amounts: Up to $100 Million (includes the guaranteed and unguaranteed portions of the loan, the balance of any pre-existing CF guaranteed loans, and the new loan request)
Loan Terms: Up to 40 years
Interest Rates: Set by the lender on a case-by-case basis, based on the useful economic life of the assets being financed, assets used as collateral, and other factors. Can be fixed or variable and are tied to the WSJ Prime Rate +1-3%.
Maximum Amount of Loan Guarantees: 80% for loan amounts less than $5 million, 70% for loan amounts $5 million-$10 million, and 60% for loan amounts greater than $10 million
Additional fees: Initial guarantee fee of 1.25%; guarantee retention fee of 0.5% of the outstanding principal balance, paid annually; fee for issuance of loan note guarantee prior to construction of 0.5%; reasonable and customary loan origination fee set by the lender.
The REAP program is the best USDA business loan option for businesses involved with renewable energy, including solar, wind, geothermal, biomass, hydropower, or hydrogen-electric generation; and businesses financing the installation or replacement of energy-inefficient equipment including high-efficiency lighting, insulation, windows and doors, HVAC, refrigeration units, and more.
Loan Amounts: $2 million to $25 million
Loan Terms: Up to 40 years
Interest Rates: Set by the lender on a case-by-case basis, based on the useful economic life of the assets being financed, assets used as collateral, and other factors. Can be fixed or variable and are tied to the WSJ Prime Rate +1-3%.
Maximum Amount of Loan Guarantees: 80% for loan amounts less than $5 million, 70% for loan amounts $5 million-$10 million, and 60% for loan amounts greater than $10 million
Additional fees: 2% application and guarantee fee
If you are seeking a USDA business loan in Florida or anywhere in the U.S., we invite you to contact North Avenue Capital. We have offices in Ponte Vedra Beach, Florida, Georgia, Tennessee, Arkansas, and Texas, and partners in all 50 states. One of our commercial lenders can assess your needs, and help you apply for the right kind of loan for your business. Call today!