The B&I Direct Loan Program provides loans to public entities and private parties who cannot obtain credit from other sources. Loans can be made for improving, developing, or financing business and industry, creating jobs, and improving the economic and environmental climate in rural communities (including pollution abatement). This type of assistance is available in rural areas (this includes all areas outside cities of more than 50,000 people and their immediately adjacent urban or urbanizing areas).

The Business and Industry (B&I) Direct Loan project must be located in an area that is economically distressed. These areas include federally designated enterprise communities, champion communities and some rural state enterprise zones. The nature and distress of the economic distress must be well documented.

Eligible applicants include any legally organized entity, including cooperatives, corporations, partnerships, trusts or other profit or nonprofit entities, Indian tribes or federally recognized tribal groups, municipalities, counties, any other political subdivision of a State, or individuals. Loans are available to public bodies and others who cannot obtain credit elsewhere.

The maximum aggregate B&I Direct Loan amount to any one borrower is $10 million.

Preference is given to projects that support one of Rural Development’s primary missions: improving both the employment and economic conditions in rural communities and towns with a population of less than 50,000.

Borrower must be unable to obtain credit at reasonable rates with or without a guarantee. The project must be located in a rural area. The borrower must be a US citizen or at least 51% of ownership must be by US citizens or permanently registered aliens.

AUTHORIZED USES OF LOAN PROCEEDS:

• Acquisition of assets
• Construction
• Working Capital
• Debt refinancing when needed to improve cash flow of the business.
  

INELIGIBLE USES OF LOAN PROCEEDS:

Rural Development Business and Industry Direct Loans cannot be issued for any project :

• likely to result in the transfer of business or  employment from one area to another or one likely to cause production that exceeds demand.
• transfer of ownership - unless this will keep a business from closing, prevent the loss of jobs in an area, or provide more jobs;
• payments to a creditor for more than the value of the collateral;
• payments to owners, partners, shareholders, or others who retain any ownership in the business;
• agricultural production, except in certain cases church or church-sponsored organizations;
• golf courses and race tracks; charitable or educational institutions
• any business that derives more than 10% of its gross revenue from gambling
• prostitution
• lines of credit
• hotels, motels, tourism, recreation and convention centers

Rural Development direct Business and Industrial Loans may be made for up to 30 years on land, buildings, and permanent fixtures; up to 15 years on machinery and equipment (depending on useful life of equipment); and up to 7 years for working capital.

The interest rate for insured loans will be the rate in effect at the time the loan is approved or at the time the loan is closed, whichever rate is lower.

Interest must be paid at least annually. Rural Development normally expects monthly payments of principal and interest, except for seasonal enterprises.

The applicant must have enough equity to provide reasonable assurance that the project will be successful. Generally, a minimum of 10 percent tangible balance sheet equity is required. Normally balance sheet equity of at least 20 to 25 percent is required for new businesses.

ALL LOANS MUST BE ADEQUATELY SECURED, COLLATERAL LIMITS ARE AS FOLLOWS:

• A maximum of 80% of current market value will be given to real estate
• A maximum of 60% of book value of book value will be assigned to inventory and accounts receivable.
• Generally, machinery, equipment, furniture and fixtures will be assigned a maximum value of 60-70 percent depending on its marketability, mobility, useful life and alternative uses.
• A maximum of 60% of book value of book value will be assigned to inventory and accounts receivable.
• Generally, machinery, equipment, furniture and fixtures will be assigned a maximum value of 60-70 percent depending on its marketability, mobility, useful life and alternative uses.

Borrowers must comply with Federal requirements relating to equal employment opportunity, historic site preservation, flood and mud slide protection, environmental impacts, the Clean Air and Water Act, the Architectural Barriers Act, and nondiscrimination. All applications will be considered without regard to race, color, religion, sex, marital status, national origin, age, or handicapping conditions.

Application should be made at the Rural Development Area Office. The Area Office staff will be glad to discuss services available from the Rural Development and explain how to prepare a written application.  To find the Area Office serving your county, click here.

Crestview 850-682-2416, ext. 4
Marianna 850-526-2610, ext. 5
Ocala 352-732-7534, ext. 5
Tavares 352-742-7005, ext. 5
West Palm Beach 561-683-2285, ext. 5