USDA Rural Development Loans

Efforts to strengthen the economy of rural communities include the USDA business and industry program, which can provide development credit in towns with populations of 50,000 or less, with priority going to places with populations of 25,000 or fewer.

ADVANTAGES

USDA may guarantee up to 70-80% of loan and can provide long-term financing for real estate improvements.

USE OF FUNDS

Purchase of land, buildings and equipment.
Working capital.
Refinancing debts (in certain cases).

SOURCE OF FUNDS

Private lender guaranteed by USDA
USDA will require at least 10% equity for existing businesses and 20-25% for new businesses.

INTEREST RATE

May be either fixed or variable for guaranteed loans.
Will be determined between lender and borrower.
Subject to USDA review and approval.

MATURITY TERM

Final maturity will not exceed:
Thirty years for land, buildings and permanent fixtures.

Fifteen years for machinery and equipment or useful life of machinery and equipment.
Seven years for working capital; interest will be due at least annually after loan is closed.

LIMITS

Business and industry loans limited to maximum of $10 million.
Loans for alcohol fuel production facilities limited to $20 million.
Applicants seeking loans for $750,000 or less advised to apply to SBA.

INELIGIBLE USES

Projects that produce goods or services for which there is insufficient demand.