The Business & Industry ("B&I") loan guarantee program is designed as a cooperative effort between the federal government and private banks to make available loans that might not otherwise be made available in a rural setting. The United States Department of Agriculture (USDA) defines a rural defines a rural setting as a community with a population of 50,000 or less. In the B&I loan guarantee program, the USDA guarantee against a loss resulting from borrower default ranges to a maximum of 80%.
Some of the more common uses of B&I loans are:
- Business acquisition
- Construction, conversion and expansion
- Plant repair and modernization
- Development costs
- Purchase of equipment, machinery and supplies
- Start up costs and working capital
- Processing and marketing capital
- Pollution control and abatement
- Refinancing of existing debts
Business Qualifications. As with all loans, the borrower must be credit-worthy and meet certain criteria to qualify for a USDA B&I loan. Some of the qualifications are:
- Business assets are located in a rural area, defined as a population less than 50,000 and not contiguous to a metropolitan area
- Adequate cash flow to meet debt obligations and operating expenses
- Adequate collateral value
- Strong management experience
- Meet equity requirements
