Updated November 13, 2026
Quick answer
A USDA Business & Industry (B&I) loan is a bank loan with a USDA guarantee for businesses in rural areas, generally outside towns of more than 50,000 people. It can pay for real estate, buildings, equipment, inventory, acquisitions and working capital, up to $25 million per borrower. Lenders commonly lend up to about 80% of collateral value, and their appetite for size varies. Axiant Partners, a broker in Boca Raton, matches rural projects with B&I lenders. These are program rules and typical ranges, not a quote.
How a B&I Loan Works
USDA doesn't lend the money. A bank, credit union or other approved lender makes the loan, and USDA Rural Development guarantees part of it against loss. Under the FY2026 annual notice the guarantee is 85% on loans under $5 million and 80% from $5 million to $25 million. The cap is $25 million per borrower, counting any B&I balance you already have.
The guarantee is what lets a lender go bigger and longer than it would on its own. Terms can run to the useful life of what you're financing, up to 40 years, and the loan must fully amortize with no balloon. The rate is negotiated with the lender, with no USDA rate sheet. For the numbers, see USDA B&I rates, fees and terms.
Where It Works: The Rural Test
The project has to be in a rural area: not in a city or town of more than 50,000 people and not in the urbanized area attached to one, by the latest census. That rules out most suburbs but leaves in thousands of county seats, highway towns and resort areas, including some fairly large towns that stand alone.
Check the exact address on the USDA eligibility map before anything else. USDA eligible areas walks through the map and the narrow exceptions.
What It Can Pay For
| Eligible | Not eligible |
|---|---|
| Buy, build or expand property | Golf courses, racetracks and for-profit zoos |
| Machinery and equipment | Lines of credit |
| Working capital (term loan) | Apartments, timeshares and other residential housing |
| Whole business, saving jobs | Commercial rental where you don't control tenants or services |
| Hotels, motels, B&Bs, camps | Speculative real estate investment |
| Nursing, assisted living | Independent living facilities |
| Refinancing, within limits | Loan finder or broker fees |
Sources: 7 CFR 5001.105, 5001.115, 5001.122. A buyout between existing owners also qualifies when the remaining owners have held their stake and worked in the business for at least 24 months and the seller keeps no interest. Hotels have their own catches, covered in USDA hotel loans. For a business acquisition outside a rural area, see business acquisition financing.
Equity, Collateral and Who Can Borrow
The rule sets minimum equity at loan closing. A borrower meets one test in its row:
| Borrower | Balance sheet equity | Or cash into the project |
|---|---|---|
| Existing business | 10% (or 9:1 debt to equity) | 10% of eligible project cost |
| New business, sales contracts | 10% | 10% |
| New business, pre-completion | 25% (or 3:1) | 25% |
| Any other new business | 20% (or 4:1) | 25% |
USDA can raise these for riskier loans. Beyond the rule, these are common lender practice:
- Collateral. Lenders discount appraised values and commonly lend up to about 80% of collateral value; personal guarantees are standard. Going-concern value comes out of the appraisal before discounting (5001.203).
- Cash flow. Lenders want history that covers the new payment, often at 1.25 times or better.
- Feasibility study. Required for a new business borrowing over $1 million (5001.306), and possible on other loans.
- Who can borrow. Companies, cooperatives, tribes, public bodies and individuals. An individual must be a U.S. citizen or a green-card holder (5001.126), and the collateral must be fixed assets in the U.S.
Worked Example: A Rural Plant Expansion
Illustrative, not a quote or an offer. A food processor that has run for years in a town of about 9,000 adds a building ($3,800,000), equipment ($1,900,000) and permanent working capital ($500,000). It meets the existing-business test by putting in 10% of project cost. Fees use the FY2026 B&I rates.
| Item | Amount |
|---|---|
| Total project cost | $6,200,000 |
| Owner's cash (10%) | $620,000 |
| B&I loan | $5,580,000 |
| USDA guarantee | 80% |
| Guarantee fee (3.0%) | $133,920 |
| Retention fee, year 1 (0.55%) | $24,552 |
| Assumed rate and blended term | 8.00%, 20 years |
| Monthly principal and interest | $46,673 |
At $5,580,000, this is already past the SBA 7(a) limit of $5 million, which is the most common reason a rural company ends up on B&I. A real lender would likely set a longer term on the building and shorter ones on the equipment and working capital, so the payment above is a blend. USDA B&I vs SBA 7(a) shows when SBA is the better fit.
How to Apply
- Confirm the address is rural on USDA's map.
- Find a lender that does B&I. Fewer banks use it than SBA, and appetite for size, industry and hotels varies.
- Build the file: three years of financials, interim statements, a debt schedule, the project budget, and a pro forma balance sheet as of closing.
- The lender applies to USDA. Expect appraisals, an environmental review and, if needed, a feasibility study.
- Conditional commitment, then closing. USDA issues a conditional commitment, the loan closes, and the loan note guarantee follows once the conditions are met.
Related guides: hotel financing for SBA hotel rules, 100% SBA financing for buying your own building, and SBA loans if your site is in a city.
Get matched with USDA and SBA lenders, or talk to a specialist: (561) 268-0465.
Frequently Asked Questions
What is a USDA business loan?
Usually it means a Business & Industry guaranteed loan: a loan from a bank or other lender, partly guaranteed by USDA Rural Development, for a business in a rural area.
What is the maximum USDA B&I loan?
$25 million per borrower, including existing B&I balances. Cooperatives doing value-added agricultural processing can go higher with the Secretary's approval.
Does my town have to be under 50,000 people?
The project must be outside any city or town of more than 50,000 people and outside the urbanized area attached to it. Check the address on USDA's eligibility map.
Can a USDA B&I loan buy a business?
Yes, if it's an entire business, not a partial stock purchase, and jobs are created or saved. Buyouts between existing owners qualify under conditions in the rule.
How much do I need to put down?
The rule's minimum is 10% for an existing business and 20-25% for most new ones, by the tests in 7 CFR 5001.105(d). Lenders may ask more.
Can USDA B&I fund working capital?
Yes, as a permanent working capital term loan. Lines of credit are not eligible.
Sources & Further Reading
- 7 CFR 5001.105: Eligible B&I projects and requirements — Eligible uses, hotels and assisted living, and the minimum equity table for existing and new businesses.
- 7 CFR 5001.3: Definitions — The B&I definition of a rural area: outside any city or town of more than 50,000 people and its contiguous urbanized area.
- 7 CFR 5001.406: Guaranteed loan amounts — B&I loans of up to $25 million per borrower.
- 7 CFR 5001.402: Term length, loan schedule, and repayment — Terms up to the useful life of the assets, capped at 40 years, with no balloon payments.
- 7 CFR 5001.115: Ineligible projects — Projects no OneRD guarantee can cover, including golf courses, lines of credit and passive commercial rental.
- 7 CFR 5001.126: Borrower eligibility — Who can borrow: entities, tribes, public bodies and individuals who are U.S. citizens or permanent residents.
- 7 CFR 5001.306: Specific application requirements for B&I projects — When a feasibility study is required, including loans over $1 million to a new business.
- 7 CFR 5001.454: Guarantee fee — How the one-time guarantee fee is calculated, the 5% ceiling for B&I, and the reduced-fee criteria.
- OneRD Annual Notice of Fee Rates and Guarantee Percentages, FY2026 (91 FR 11272) — B&I guarantee fee 3.0%, retention fee 0.55% and guarantee of 85% under $5 million or 80% from $5 million to $25 million; reduced-fee tier 1.0% and 0.50%.
- USDA Rural Development: Business & Industry Loan Guarantees — Program overview from USDA Rural Development.
Figures above describe ranges commonly seen across lenders and reflect published guidance as of the date on this page. Confirm current terms with the cited source or your lender before acting.