For this article, our commercial loan experts at North Avenue Capital (NAC) wanted to share some facts about USDA Business & Industry (B&I) Loans, Community Facility (CF) Loans, and the Rural Energy for America Program (REAP). This will give you clarity on what type of loan you should and can apply to and be eligible for.
USDA Business & Industry (B&I) Loan Program
- This loan is designed by the USDA Rural Development Program to help credit-worthy rural businesses obtain needed credit to grow and create jobs in their local communities.
- The program bolsters the availability of credit by guaranteeing loans for businesses in rural areas across the U.S.
- USDA business loans are designed to help rural business owners.
- USDA business loans are an easy way for rural businesses to receive access to capital.
- To qualify for a USDA loan, your business/project needs to be in a certain geographic area with a population of 50,000 or less.
- The type of businesses that qualify for a USDA business loan include for-profit businesses, nonprofits, public bodies, cooperatives, individuals, and federally recognized tribes.
- You must be a U.S. citizen or live in the U.S. with a legal status to be eligible for this loan.
- USDA business loan amounts range from $1 million to $25 million, with a sweet spot of $2 million to $10 million. NAC does not fund loans of less than $2 million.
- There is a limited supply of USDA loans, which means the process to get one is competitive.
USDA Community Facilities (CF) Loan Program
- This program provides affordable funding to develop essential community facilities in rural areas. An eligible community facility provides an essential service to the local community (hospitals, courthouses, fire departments, museums, libraries, food pantries, nursing homes, police stations, prisons, greenhouses, etc.) and does not include private, commercial, or business undertakings.
- Eligible borrowers of CF Loans include public bodies, community-based nonprofit corporations, and federally recognized tribes.
- To qualify for a CF Loan, your organization must be in a city, village, township and town, or federally recognized tribal land with no more than 50,000 residents.
- CF funds can be used to purchase, construct, and/or improve essential community facilities, purchase equipment, and pay related project expenses.
- Priority for a CF Loan is based on population and median household income (small communities with a population of 5,500 or less with a median household income below 80% of the state nonmetropolitan median household income.
- It is a competitive process to get a CF.
USDA Renewable Energy for America (REAP)
- This program provides government-guaranteed loans and grants to agricultural producers and rural small businesses to upgrade, replace, and or construct energy-efficient systems.
- Those eligible for this program include state and local governments, federally recognized tribes, a land-grant college or university or other institutions of higher education, rural electric cooperatives, public power entities, an instrumentality of a state, tribal or local government, and a Resource Conservation & Development Council.
- The funds must be provided to rural small businesses, and the small business (not the agricultural producers) must be in eligible rural areas.
- eligible use of the funds include renewable energy systems, such as biomass, geothermal, hydropower, hydrogen, wind generation, solar generation, and ocean generation, and energy efficiency improvements, such as HVAC, insulation, lighting, cooling and refrigeration, doors and windows, pumps for sprinkler pivots, and diesel to electric irrigation motor.
Looking to Apply for a USDA Small Business Loan?
Our USDA Loan officers at North Avenue Capital, LLC (NAC) will determine if a USDA loan is right for your financing needs. NAC is the only specialized commercial lender that exclusively lends USDA B&I Loans nationwide. It’s all we do. We have taken the time to create relationships with the USDA national and state offices to provide the best lending experience for our borrowers. We offer competitive interest rates, flexible terms, and high LTVs, and will walk you through the steps of eligibility.
We will let you know what you need to apply for a USDA small business loan, as well as let you know what you are allowed and not allowed to use the funds for to be approved for a loan. At NAC, our mission is to provide capital to empower American business growth. Because NAC is a non-traditional, private lender, we can provide our borrowers with the terms that fit their financial needs.
NAC possesses a genuine interest in partnering with you to enhance your business, create jobs in local communities, and identify opportunities to improve environmental conditions for the next generation of entrepreneurs. We have experience starting, building, and operating successful businesses across multiple industries, and are committed to forming lasting partnerships, not just closing loans.
As one of the only lenders in the country exclusively focused on USDA Rural Development programs, NAC uses its expertise, capital, and relationships to build businesses, grow local economies, and create jobs in rural America.
Ready to work with one of our USDA business loan specialists? Visit our USDA business loans page to learn more or call us at 866-526-4950 with any USDA business loan questions or to determine your USDA business loan eligibility.
We have office locations in Tennessee, Texas, Georgia, and Florida, but we are not limited by geographic location like many rural-oriented financial institutions and can partner on projects in all 50 states.