An Introduction to USDA Business & Industry Loans
Familiarity is a fixture of living in rural America. Navigating backroads is committed to muscle memory, facial recognition is developed over time not by technology, and the most frequent diner order is “the usual.”
But there’s another feeling all too familiar to those who live in our country’s less densely populated towns: the shortage of capital.
The rural reality is harsh but true: plans crafted on Main Street are less likely to secure backing from Wall Street.
Lenders perceive the applications of rural companies as riskier; the prospect of their success, less ironclad. As such, the entrepreneurs, developers, and job creators in these communities have long been at a capital disadvantage – until now.
The USDA’s Game-Changer for Rural Business Owners
A number of years ago, the USDA crafted a novel solution. The department best known for its regulation and support of agriculture devised a series of plans to strengthen the economies and bolster the quality of life in rural areas. In addition to acting as a direct lender, the USDA addressed the underlying concerns of traditional lenders by participating as a guarantor and ultimately easing access to capital in rural markets. Today, USDA Rural Development guarantees a $234 billion portfolio of loans – a massive portfolio few are aware of.
Types of USDA Rural Development Loans
The little-known program provides loans that fall into three categories: business & industry, community facilities, and energy (REAP). Each is designed to address a specific subset of needs that share a common goal: to foster the flourishing of rural America.
USDA Business & Industry Loan (B&I)
Designed to incentivize financial backing for the creation of businesses and jobs, USDA B&I Loans are av