Which USDA Commercial Loans Are Right for Your Business

Getting a business loan in Florida, or anywhere in the U.S. where your commercial venture might be located, can help provide the financial foundation for your future success. Whether you own or are considering launching a small business – or a big one – having the appropriate funding in place to finance things like business development, acquisition, commercial construction, expansion, conversion, repair, machinery, equipment, supplies, working capital, and/or debt restructuring can make all the difference between prosperity or a lack of progress and profit.

Of course, getting a commercial business loan is not always easy, especially through private banks and lenders. Fortunately, there are some great government-backed solutions through agencies like the Small Business Administration (SBA) and the U.S. Department of Agriculture (USDA) that approved lenders, like North Avenue Capital (NAC), can help you navigate. Many people know about SBA loans, but often are pleasantly surprised to learn about the USDA’s commercial business loans available through its Rural Development Program, also known as the “OneRD Guaranteed Loan Initiative.”

For many businesses, the USDA’s broad range of commercial lending programs, which include those for general Business & Industry (B&I), Community Facilities (CF), and Rural Energy for America Program (REAP) are often far more flexible, suitable and attractive than SBA loans, offering higher loan limits and more favorable terms, among other benefits. So, which type of commercial loans are right for your business? That depends primarily on the type of business you are seeking financing for, where it is located, and how much funding you need. Below is a decision tree to help you navigate your best commercial business loan options in Florida, or wherever your business might be located.

The first, most obvious question you need to answer is how much financing are you seeking? The SBA, as its name implies is primarily set up for small businesses, typically defined as those with less than $5 million annually in after-tax income. Due to this, lending limits are inherently lower, typically maxing out at $5 million.

By contrast, USDA Loans can be made for many different kinds of small and large businesses with lending amounts of up to $25 million, and even $40 million for certain co-operatives. Indeed, some USDA Community Facilities Loans can reach as high as $100 million. Minimum loan amounts for USDA Business & Industry Loans through NAC, America’s #1 USDA Rural Development Program Business & Industry Loan leader, start at $2 million.

The next question to answer is, are you located in a rural area? The USDA’s OneRD Guarantee Loan Program was established to support job growth and economic prosperity in rural areas across the country. While many may assume this to be some large hurdle, in reality, it is not. That’s because the USDA defines “rural areas” as cities or towns with populations of less than 50,000 residents. That represents 97% of the entire geographic area in the U.S.

In addition, businesses with headquarters in larger metro areas also can qualify, if the branch or division for which the funding is targeted is located in a qualifying area. You can quickly see if your address qualifies for a OneRD USDA Business Loan using this Geographic Eligibility Map.

If you are in a qualifying area, congratulations! You are one step closer to a potential USDA commercial business loan. But, which specific USDA lending programs might be suitable for your business? Continue to follow the decision tree.

What about other kinds of businesses that do find themselves inside a qualifying area? Which specific USDA lending programs might be suitable for your business? Continue to follow the decision tree.

Are you a business involved in renewable energy? Then you likely qualify for a USDA Rural Energy for America (REAP) Loan. This includes companies involved in geothermal, solar, wind, biomass, hydropower, or hydrogen-electric generation. It is also for any business seeking to finance the replacement or installation of energy-inefficient equipment with energy-efficient lighting, insulation, windows and doors, HVAC, refrigeration units, and more!

Importantly, the USDA’s OneRD lending programs are not only for “for-profit” companies; they are for a wide range of borrower types including pre-existing businesses and start-ups, for-profit and nonprofit businesses, franchises, individuals, partnerships, cooperatives, federally-recognized Native American Tribes, publicly traded companies, and even public bodies and municipalities.

If you are a nonprofit community facility, then you likely qualify for a USDA Community Facility (CF) Loan. There are more than 100 kinds of  “essential community facilities” that could qualify for USDA CF Loans. These include everything from hospitals and healthcare facilities (labs, clinics, pharmacies, doctor offices, physical therapy centers, etc.) to fire, rescue, and public safety facilities; community, public, social, educational, or cultural facilities, including community parks and activity centers; transportation projects (streets, bridges, roads, ports, and airports); utility projects; telecommunications projects that involve public safety; and more.

Finally, for almost every other type of business, there is the USDA’s Business & Industry Loan Program (B&I). This is the “meat and potatoes” USDA lending program for the broadest range of business types, everything from business services to business supplies, hospitality, manufacturing, industrial, automotive, education, entertainment, grocery stores, restaurants, and so many more.

As you can see, the USDA offers an extensive variety of business loans for commercial borrowers in Florida and other areas. While traditional SBA loans may be appropriate for many small businesses USDA Rural Development Loans can be even more attractive and fitting for many other kinds of commercial borrowers.

If you are seeking a business loan in Florida, or anywhere in the U.S., and are not sure which loan type may be right for you, contact North Avenue Capital today. We are the nation’s #1 provider of USDA Business & Industry Loans with offices in Northeast Florida, Nevada, Arkansas, Georgia, Tennessee, 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!