active Federal Loan

How much does USDA guarantee on a business loan? 80–85% under B&I

USDA Rural Development

Up to $25,000,000

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The short version

USDA's Business & Industry (B&I) program guarantees 85% of a rural business loan under $5 million and 80% from $5 million up to $25 million, per its latest annual notice. Regulation allows up to 90%, but the notice sets the working rate. Your bank makes the loan; USDA backs the lender.

Federal loan guarantee program that enables rural businesses to access commercial financing they couldn't otherwise obtain. USDA Rural Development guarantees 80–85% of commercial loans (per the latest annual notice) made by approved lenders to rural businesses — covering virtually any business purpose including working capital, equipment, real estate, and business acquisition. The program targets rural areas (outside cities of 50,000+) and is designed to create and preserve jobs in underserved rural communities. Loans up to $25M; the 85% USDA guarantee for loans under $5M makes lenders willing to finance rural projects with non-traditional collateral.

Funding type: Loan
Level: Federal
Amount range: $1,000 – $25,000,000
Realistic amount: Most B&I borrowers access $500,000–$5,000,000 where the 85% guarantee makes the most meaningful difference vs. conventional financing. Larger loans ($10M+) are typically for agribusiness, food processing, and industrial projects.
Deadline: Rolling — no application deadlines. Lenders can submit B&I applications to USDA Rural Development at any time.
Status: active
States: Nationwide
Payment model: lump sum

Who qualifies

Business must be located in a rural area (outside urbanized areas of 50,000+) — verify with local USDA RD state office
For-profit businesses, nonprofits, cooperatives, federally-recognized tribes, and public bodies (municipalities, counties) are all eligible entity types
Citizens, permanent residents, and legal entities where principal owners are citizens or permanent residents
Individuals, partnerships, corporations, cooperatives, agricultural cooperatives, and for-profit hospitals
Must demonstrate the loan will create or save rural jobs, or provide essential community services
Borrower must demonstrate the project can't be financed without the guarantee at reasonable terms (credit elsewhere test)
Key businesses NOT eligible: golf courses, racetracks, gambling establishments, churches or religious instruction, fraternal or lodge facilities, federal or state agency programs with conflicting assistance, or projects producing pornographic material

Hard requirements

Requires federal certification:
Rural location required

Common questions about the B&I guarantee

Does USDA lend me the money?

No. A commercial lender makes the loan and USDA guarantees part of it. Banks, credit unions and other approved lenders originate B&I loans, and USDA Rural Development backs a share of the lender's loss if the loan defaults. You apply through the lender, so start by asking lenders in your area whether they do B&I loans, or call your USDA Rural Development state office for names.

How big can a B&I loan be?

Up to $25 million for most borrowers. Regulation allows up to $40 million for rural cooperatives that add value to agricultural products, and only the Secretary of Agriculture can approve a guarantee above $25 million. Most borrowers sit far below the cap, and the guarantee percentage drops once the request reaches $5 million, so size changes how much risk the lender carries.

Is my town rural enough?

Probably, if it is not a city of more than 50,000 people or the built-up area next to one. The rule uses the latest decennial census and does not allow approval that is conditional on meeting the rural test, so confirm the project address first. Use USDA's property eligibility map or ask the state office before you spend time on a business plan.

Is this better than an SBA 7(a) loan?

It depends on size and location. The B&I guarantee is limited to rural projects but allows loans far larger than the SBA 7(a) cap. A business in town with a smaller need usually fits SBA 7(a) better; a rural project above that range is where B&I earns its place. Your lender can price both.

What if the guarantee does not fit my project?

Look at the grant and smaller-loan options for rural businesses. The USDA Rural Business Development Grant goes to organizations that help rural businesses, and SBA 504 loans cover real estate and equipment. The programs differ on who applies, so check each one's eligibility line first.

What it covers

Eligible expenses

Working capital for operations, payroll, accounts payable, inventory
Purchase of business equipment, machinery, and technology
Purchase, construction, or renovation of owner-occupied commercial real estate
Business acquisition (entire business or controlling interest)
Refinancing existing debt if the refinance improves cash flow and creates or saves jobs (limited)
Agriculture-related processing facilities (grain elevators, packing plants, cold storage)
Renewable energy and energy efficiency projects in rural areas
Rural healthcare facilities (clinics, hospitals, nursing homes)
Rural childcare centers, eldercare facilities, educational facilities
Tourism and hospitality projects in rural areas (hotels, restaurants, recreational businesses)

Ineligible expenses

Projects primarily serving urbanized areas with populations over 50,000
Golf courses, racetrack facilities, or gambling operations
Churches, religious instruction, or facilities primarily for religious purposes
Fraternal organizations or lodges
Projects owned by federal or state government (some exceptions for public utilities)
Investor-owned real estate speculation or non-owner-occupied rental properties
Lines of credit (B&I must be a term loan or operating loan, not a revolving credit facility)
Costs already incurred before USDA Conditional Commitment (retroactive coverage not allowed)

How to apply

1

Confirm rural location eligibility

Use USDA RD's Rural Eligibility Map (eligibility.sc.egov.usda.gov) to verify the project address is in an eligible rural area. If the address is borderline, contact the USDA Rural Development state office to confirm — USDA uses current census data, and some areas recently classified as urban may still qualify under grandfathering provisions.

~1 hrs
2

Find a USDA-approved B&I lender

B&I loans must be originated by a USDA-approved commercial lender — banks, credit unions, insurance companies, and CDFIs all participate. Many regional agricultural banks and Farm Credit institutions have B&I experience. Contact your USDA Rural Development state office for a referral list. The lender drives the process; USDA reviews the lender's package.

~3 hrs
3

Lender prepares and submits B&I application to USDA

The lender collects all borrower information and prepares the full B&I application package for USDA. Required information: business plan, feasibility study (often required for startups), 3 years financial statements (or tax returns), personal financial statements for 20%+ owners, environmental review, credit analysis, appraisals, and job creation/retention projections. The lender submits to the USDA RD state office.

~30 hrs
4

USDA reviews and issues Conditional Commitment

USDA RD state office (or Washington for loans >$10M) reviews the package for program eligibility, rural area qualification, environmental compliance, and loan quality. USDA issues a Conditional Commitment letter listing remaining conditions before guarantee issuance. Processing: 30–90 days for most loans; 90–180 days for complex or large loans.

~5 hrs
5

Satisfy conditions, close loan, and USDA issues guarantee

After satisfying all conditions (appraisals, environmental clearance, title insurance, flood certification, insurance), the lender closes the loan. USDA issues the Loan Note Guarantee upon closing. Funds are disbursed by the lender — typically a combination of construction draws and operating capital draws for complex projects.

~5 hrs

Insider tip

A feasibility study prepared by an independent third party substantially increases USDA's confidence in the project — especially for rural manufacturing or food processing startups. Budget $5,000–$20,000 for a credible feasibility study; it pays back in faster USDA approval.

Deadline & timing

B&I is a rolling program. Unlike competitive USDA grant programs, B&I has no annual NOFO or intake window — lenders submit applications to the local USDA Rural Development state office when a borrower's package is complete. However, USDA processing capacity varies by state office staffing, and some offices have multi-week queues. Complex loans over $10M require Washington-level review and take longer.

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