Commercial Loans – The USDA Loan Most People Don’t Know About

Finding funding for your project is often more about locating little known funding sources than most people in the finance industry would like to admit. How many people would think, for instance, that the USDA provides anything remotely financial? Well, the agency does.

The United States Department of Agriculture is charged with supporting the agricultural business in the country. The USDA writes loans? Well, not really, but the agency does the next best thing, which is guaranteeing loans. The Business & Industry Guaranteed Loan Program is designed to support the development of business in rural areas via their guarantees.

Who can borrow in this program? Well, pretty much anyone. That being said, you have to be in a business that promotes the conservation, development or use of water for agriculture. Alternatively, you business could be based on the development of renewable energy placements in rural areas. While I am not sure what renewable energy has to do with agriculture, it is an accepted part of this loan package.

What can the funds be used for? Once again, the scope of acceptable use is very broad. These loans can be used for the very specific purpose of…staying in business. Yes, there is a crisis aspect of the loan that you can access. Then there is the more traditional application to purchase lands, improve current capital structures, modernize and the like. Loan-to-value can be as high as 85 percent. Loan terms are as long as 30 years and loan amounts can be up to $25 million.

Is there any limit on the USDA B&I Guaranteed Loan Program at all? Yes. The one area the government is very serious about is that the money be used in a rural setting. This means that the target market where the loan will be used must have a population of less than 50,000 people. Anything over that and you are bumped out of the program.

How do you find out about funding sources like this loan program? Using commercial loan brokers is the best answer. There are so many programs out there, particularly government versions, that any reasonable need can be financed if you can just find the funding needle in the haystack.

Thomas Ajava writes about commercial finance loans, mortgages and other financial topics for CommercialFinanceLoans.com.