and agricultural producers with funds for renewable energy systems and energy e cient improvements. Renewable energy systems may include biomass, geothermal, hydropower, hydrogen, or wind power systems, among others. Energy e ciency improvements include high e ciency heating and cooling, insulation, lighting, windows and doors. Unlike the other programs, REAP is oered to agricultural producers as well as small business owners. Understanding Eligibility: How the USDA De nes ‘Rural’ To qualify for one of the USDA’s loan programs, it pays to get out of town. Actually, it’s required. To de ne “rural,” the USDA looks to the Census bureau, which spells it out clearly: a city or town with a population of fewer than 50,000 inhabitants, excluding those adjacent to urbanized areas. In other words: a small town surrounded by small towns. If the criteria sound complex, there’s an easy solution: potential borrowers can plug an address into the USDA’s veri cation tool to nd out if it quali es. (Scan the adjacent QR code for a direct link). ATale of Two Programs: USDA vs. SBA Make mention of a government-backed business loan, and you’re likely to elicit a consistent response: “Oh, through the SBA?” e misconception is understandable. After all, the USDA B&I program is shamefully underrepresented. But the programs could not be more dierent. From longer terms and higher maximums to substantially lower default rates, the USDA B&I loan program is a more robust option for those who qualify. ose borrowing via an SBA loan could re nance under the USDA B&I program. Here’s how the two compare:
Family Entertainment Manufacturing/Production Cold Storage Facilities Qualifying Verticals:
Hotels/Hospitality Marinas/Maritime
Apiaries/Wildlife/Greenhouses Breweries/Wineries/Distilleries
Ag Processing Solar/Energy Oil and Gas/Mining
Charter Schools Pharmaceutical Urgent/Primary Care Commercial & Industrial Real Estate Tenant Property
SBA 7-25 Years Required 100-1500 Depending on Industry
USDA B&I 7-30 Years Not Required Unlimited
Term Owner
Depending on Use
Depending on Use
Occupancy Maximum Employees (Borrower)
$25K $5MM Any
$2MM $25MM
Loan Minimum Loan Maximum Areas Served
Rural Areas with Populations <50K
Scan for Eligibility Map:
As distinct as the USDA B&I loan program is from comparable SBA oerings, its contrast with traditional lending is even more stark. e USDA is equipped to handle loans that would have smaller banks running for the hills. And unlike traditional loans that feature a call or bullet every 3 to 5 years, USDA B&I loans have neither, nor do they have balloon payments. Real Estate purchases amortize over 30 years, with a maximum LTV ratio of 80% (compared to 65-70% at most traditional banks). And for those nancing machinery and equipment, the USDA program beats typical amortization by a multiple of ve, oering a full 15 years compared to just 3-7.
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