USDA Business & Industry Loan Guarantee

USDA B&I

A federal guarantee of 80–85% that lets a lender write terms up to 40 years — if the project sits in a town under 50,000 people.

Guarantee: 85% under $5M; 80% at $5M and above, for FY2026 approvals
Maximum term: 40 years; Actual term is set by the useful life of what is financed
Rural definition: Under 50,000 people; Based on the project location, not the borrower's headquarters
Lender location: Anywhere in the US; The lender does not need to be local to the project
Interest rate: Negotiated; Fixed or variable, adjusted no more often than quarterly

What USDA B&I actually is

The USDA Business & Industry program guarantees a portion of a commercial loan made by a conventional lender, provided the project is located in a rural area. The guarantee is what allows the lender to extend terms far beyond what it would otherwise offer, which is where most of the borrower's benefit comes from.

The thing that trips people up The population test applies to where the project is, not where the company is based. A business headquartered in a large city can still qualify if the facility being financed sits in a rural area — this is the most commonly misunderstood part of the program.

When it is the right tool

Buying, building or modernizing a facility in a rural community
Machinery and equipment with a long useful life
Business acquisitions that preserve rural jobs
Refinancing existing debt where it demonstrably improves cash flow

When it is not

Lines of credit
Housing, golf courses, gambling facilities and churches
Agricultural production, with limited exceptions
Projects inside a city or town over 50,000 people

The rural test, precisely

This is where most enquiries go wrong, so it is worth being exact. The population threshold applies to the location of the project — the facility being financed — not to where the business is headquartered and not to where the borrower lives. A company with offices in Philadelphia can finance a plant in a town of 12,000 under this program. A company headquartered in that same town cannot use B&I to finance a building it is buying in Philadelphia.

The lender does not have to be local either. Any US lender can originate a B&I loan for a project anywhere in the country, which matters because the pool of lenders genuinely comfortable with the program is smaller than the pool of banks near any given rural town.

Check the address, not the impression Population figures come from census data and town boundaries do not always match how people describe where they are. Run the actual project address before you write off a deal — and before you promise one.

Why the guarantee percentage matters to you

The 80–85% guarantee is protection for the lender, not for the borrower. Its value to you is indirect but large: because the government absorbs most of the loss risk, the lender can write a term far longer than its own credit policy would allow on an unguaranteed loan. A 25 or 40-year amortisation on a rural facility is not something a bank offers out of generosity — the guarantee is what makes it possible.

For fiscal year 2026 approvals, the guarantee is 85% on loans under $5 million and 80% at $5 million and above. These percentages are set by fiscal year and have moved before, which is why the figure on this page carries a date.

What the program will not do

The exclusions are firm and worth knowing before you spend time on a structure that cannot work:

Lines of credit
Housing, golf courses, gambling facilities and churches
Agricultural production, with limited exceptions
Projects inside a city or town over 50,000 people

If your project fails the rural test, SBA 504 may still cover owner-occupied real estate and equipment anywhere in the country. If the building itself is the opportunity — an energy or resiliency retrofit, or a conversion — C-PACE is not geographically restricted in the same way.

USDA B&I questions worth settling early

Does my business have to be in a rural area to use USDA B&I?

The project has to be. The borrower's headquarters may be in a larger city as long as the facility being financed is located in a community of 50,000 or fewer people. Eligibility is checked against the specific project address.

How long can a USDA B&I loan run?

Up to 40 years. In practice the term is matched to the useful life of what is being financed — real estate gets the longest terms, equipment shorter ones.

What is the guarantee percentage for USDA B&I?

For fiscal year 2026 approvals, 85% for loans under $5 million and 80% for loans of $5 million or more. The percentage matters to the lender's risk, which is what makes the long term possible.

Can USDA B&I refinance existing debt?

Yes, where the refinancing improves cash flow and the other program requirements are met. Unlike SBA 7(a), the eligible-debt rules here are their own — confirm the specific debt against current program guidance.

What can USDA B&I not be used for?

Lines of credit, housing, golf courses, gambling facilities, churches, and agricultural production, with limited exceptions.

Eligibility check

Does your project pass the rural test?

Send the project address and what the money is for. We will confirm the population test and whether the use of funds is eligible before anyone talks about terms.

Commercial and business purposes only — we do not place consumer loans.
If the project does not qualify, we say so and tell you what would change that.
No credit pull to get an answer on program eligibility.