Updated November 13, 2026
Quick answer
Under the FY2026 USDA notice, B&I loans carry a one-time 3.0% guarantee fee and a 0.55% annual retention fee, both on the guaranteed share; USDA guarantees 85% of loans under $5 million and 80% from $5 million to $25 million. Rates are negotiated with the lender, and terms run up to the assets' useful life, capped at 40 years. Axiant Partners, a broker in Boca Raton, compares B&I lenders. Rates here are illustrative.
The Fee and Guarantee Table
USDA sets these once a year in a Federal Register notice. The latest published is the FY2026 OneRD notice, effective October 1, 2025. Check for a newer notice before you close; the rates in effect when your guarantee is obligated stay with the loan.
| B&I loan type | Guarantee fee | Annual retention fee | Guarantee |
|---|---|---|---|
| Under $5 million | 3.0% | 0.55% | 85% |
| $5 million to $25 million | 3.0% | 0.55% | 80% |
| Reduced-fee projects | 1.0% | 0.50% | 80% |
| Guarantee before completion | Add 0.50% | - | - |
Both fees are charged on the guaranteed share, not the whole loan (7 CFR 5001.454, 5001.455). The lender pays USDA and may pass the cost to you. The rule caps the B&I guarantee fee at 5%, and the guarantee itself at 90%.
The Guarantee Fee by Loan Size
Computed from the FY2026 rates. Notice the step at $5 million, where the guarantee drops from 85% to 80%:
| Loan | Guarantee | Guaranteed share | Fee at 3.0% | Fee at 1.0% (reduced) |
|---|---|---|---|---|
| $1,000,000 | 85% | $850,000 | $25,500 | $8,000 |
| $3,000,000 | 85% | $2,550,000 | $76,500 | $24,000 |
| $4,900,000 | 85% | $4,165,000 | $124,950 | $39,200 |
| $5,000,000 | 80% | $4,000,000 | $120,000 | $40,000 |
| $10,000,000 | 80% | $8,000,000 | $240,000 | $80,000 |
| $25,000,000 | 80% | $20,000,000 | $600,000 | $200,000 |
Who gets the reduced fee: the rule lists projects in distressed communities, places with long-term population decline, persistent poverty counties, recent disaster areas, places with unemployment at 125% or more of the national rate, and tribal lands, plus certain local food, value-added and regional plan projects. The lender has to request it, and annual limits apply.
What the Retention Fee Adds Up To
The retention fee is charged every year on the guaranteed share of the outstanding balance, so it shrinks as you pay down. On an assumed $4,000,000 loan at 8.00% over 25 years (85% guaranteed):
| Item | Amount |
|---|---|
| First year | $18,700 |
| Over the full term | $315,930 |
| Same loan, reduced 0.50% fee | $270,320 |
| One-time guarantee fee | $102,000 |
Retention fees not paid within 60 days of the due date are delinquent and can lead to cancellation of the guarantee, so lenders usually build the fee into your payment schedule.
How Rates Are Set
USDA doesn't publish B&I rates. Under 7 CFR 5001.401, the rate is negotiated between you and the lender. It can be fixed, variable or a mix, and:
- it can't be more than the lender charges on similar loans without a guarantee;
- a variable rate must follow a published base rate, such as Prime, and can adjust no more often than quarterly;
- the guaranteed and unguaranteed parts can carry different rates.
With Prime at about 7.00%, here is what a $3,000,000 loan over 25 years costs at three illustrative rates:
| Rate | Monthly P&I | Annual debt service |
|---|---|---|
| 7.50% | $22,170 | $266,037 |
| 8.50% | $24,157 | $289,882 |
| 9.50% | $26,211 | $314,531 |
These are examples, not a rate quote. Lenders price to the deal, the collateral and your credit, and many offer a fixed rate for a period before it adjusts.
Terms, Payments and Other Costs
- Term. Set by the lender with USDA concurrence, up to the useful life of the assets financed or pledged, never more than 40 years (7 CFR 5001.402). Lenders commonly match shorter terms to equipment and working capital.
- No balloons. The loan must fully amortize. Payments are at least annual.
- Interest-only start. Allowed, but the first full payment must begin within 3 years.
- Lender fees. Reasonable and customary, the same as on the lender's other loans; prepayment penalties are allowed if written into the documents.
- Broker fees. Loan proceeds can't pay loan finder or broker fees (7 CFR 5001.122).
- Third-party costs. Appraisals for real estate or existing equipment over $250,000, and a feasibility study when required.
For how these terms compare with SBA, see USDA B&I vs SBA 7(a). For whether your project qualifies at all, start with USDA Business & Industry loans.
Get matched with USDA and SBA lenders, or talk to a specialist: (561) 268-0465.
Frequently Asked Questions
What is the USDA B&I guarantee fee in 2026?
3.0% of the guaranteed share under the FY2026 notice, or 1.0% for projects that qualify for the reduced fee. On a $3 million loan guaranteed at 85%, that's $76,500.
What is the USDA B&I annual renewal fee?
It's called the periodic guarantee retention fee: 0.55% a year on the guaranteed share of the outstanding balance under the FY2026 notice, or 0.50% for reduced-fee projects.
What percentage does USDA guarantee on a B&I loan?
85% on loans under $5 million and 80% from $5 million to $25 million under the FY2026 notice. The rule allows up to 90%.
What interest rate do USDA business loans have?
There's no USDA rate. It's negotiated with the lender, can be fixed or variable, and can't exceed what the lender charges on similar unguaranteed loans.
How long can a USDA B&I loan be?
Up to the useful life of the assets financed or used as collateral, with a 40-year maximum and no balloon payment.
Can the fees be financed?
The lender pays the fees to USDA and may pass them to the borrower. Whether they're rolled into the loan is part of the lender's structure.
Sources & Further Reading
- 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%.
- 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.
- 7 CFR 5001.455: Periodic guarantee retention fee — The annual fee on the guaranteed share of the outstanding balance, fixed for the life of the loan.
- 7 CFR 5001.401: Interest rate provisions — Rates are negotiated between lender and borrower; variable rates adjust no more than quarterly.
- 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 5001.122: Ineligible uses of loan funds — Uses loan proceeds cannot pay for, including loan finder or broker fees.
- 7 CFR 5001.203: Appraisals — Appraisal rules, including deducting going-concern value before collateral is discounted.
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.