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Business and Industry Guaranteed Loans (B&I)

Date Last Updated1/30/2013
Incentive TypeLoan
State/FederalU.S./Federal
Incentive Administrator/Contact OfficeUSDA - Rural Development
Incentive Initiation Date1/1/2009
Incentive Size and Funding SourceThe purpose of the B&I Guaranteed Loan Program is to improve, develop or finance business, industry and employment, and improve the economic and environmental climate in rural communities. The program bolsters the existing private credit structure through the guarantee of quality loans that will provide lasting community benefits.

The percentage of guarantee, up to the maximum allowed, is a matter of negotiation between the lender and the Agency. The maximum percentage of guarantee is 80% for loans of $5 million or less, 70% for loans between $5 and $10 million, and 60% for loans exceeding $10 million. The total amount of Agency loans to one borrower must not exceed $10 million. The Administrator may, at the Administrator's discretion, grant an exception to the $10 million limit for loans of $25 million under certain circumstances. The Secretary may approve guaranteed loans in excess of $25 million, up to $40 million, for rural cooperative organizations that process value-added agricultural commodities.

The maximum repayment for loans on real estate will not exceed 30 years; machinery and equipment repayment will not exceed the useful life of the machinery and equipment purchased with loan funds or 15 years, whichever is less; and working capital repayment will not exceed 7 years. The interest rate for the guaranteed loan will be negotiated between the lender and the applicant and may be either fixed or variable, as long as it is a legal rate. The variable interest rate may be adjusted at different intervals during the term of the loan, but the adjustments may not be more often than quarterly. Collateral is required and must have documented value sufficient to protect the interest of the lender and the Agency. The discounted collateral value will normally be at least equal to the loan amount. Lenders will discount collateral consistent with sound loan-to-value policy.
Eligible RecipientA borrower may be a cooperative organization, corporation, partnership or other legal entity organized and operated on a profit or nonprofit basis; an Indian tribe on a Federal or State reservation or other Federally recognized tribal group; a public body; or an individual. Individual borrowers must be citizens of the United States (U.S.) or reside in the U.S. after being legally admitted for permanent residence. Corporations or other nonpublic body organization-type borrowers must be at least 51% owned by persons who are either citizens of the U.S. or reside in the U.S. after being legally admitted for permanent residence. B&I loans are normally available in rural areas, which include all areas other than cities or towns of more than 50,000 people and the contiguous and adjacent urbanized area of such cities or towns.
Eligible FuelDoes Not Specify
Eligible Project Size (MW)Does Not Specify
Minimum Efficiency Required (%)Does Not Specify
Other Selected Eligibility CriteriaA borrower must be engaged in or proposing to engage in a business that will:
  • Provide employment.
  • Improve the economic or environmental climate.
  • Promote the conservation, development and use of water for aquaculture.
  • Reduce reliance on nonrenewable energy resources by encouraging the development and construction of solar energy systems and other renewable energy systems.
Loan purposes must be consistent with the general purpose contained in the regulation. They include but are not limited to the following:
  • Business and industrial acquisitions when the loan will keep the business from closing, prevent the loss of employment opportunities or provide expanded job opportunities.
  • Business conversion, enlargement, repair, modernization or development.
  • Purchase and development of land, easements, rights-of-way, buildings or facilities.
  • Purchase of equipment, leasehold improvements, machinery, supplies or inventory.
Other Incentive DetailsIt is not intended that the guarantee authority will be used for marginal or substandard loans or for relief of lenders having such loans.
Resource Website(s) http://www.rurdev.usda.gov/BCP_gar.html exit EPA

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