Program Description: The Business and Industry (B&I) Loan Guarantee program is a lender-driven program that provides a loan guarantee to the bank or other approved lender to finance private businesses located in rural areas of 50,000 population or less. The commercial lender applies to RBS for the B&I loan guarantee and, if approved, makes and services the loan. Most traditional lenders are eligible. Other (non-traditional) lenders may be considered for eligibility based on experience and expertise. The cost to the lender is a one-time fee of 2% of the amount guaranteed. The guaranteed portion of the loan does not count against a financial institution’s lending limit. All or part of the guaranteed portion of the loan may be sold on the secondary market.
Type of Assistance: The maximum guarantee provided to the lender is generally 80% for loans up to $5 million, 70% for $5 to $10 million, and 60% for $10 to $25 million. Business loan guarantee purposes include, among other items, construction, acquisition, working capital, equipment purchase, startup costs, expansion costs, and, in some cases, debt refinancing. Loan requests not eligible for B&I assistance include lines of credit, businesses involved in gambling, golf courses, or agriculture production (some exceptions apply for Vertically-Integrated Agricultural Operations).
Eligibility Requirements: Most traditional lenders are eligible. Other (non-traditional) lenders may be considered for eligibility based on experience and expertise. Applicants for these loans may be any legal entity, including individuals, public and private organizations, and federally recognized Indian tribal groups. The business must be located in rural areas of 50,000 population or less.
Interest Rate: Interest rates are negotiated between the lender and business. They may be fixed or variable.
Terms: The term is typically up to 30 years for real estate, 15 years for machinery and equipment (depends on useful life), and 7 years for working capital.
Collateral: The lender will ensure collateral is sufficient. All collateral must secure the entire loan. Personal and corporate guarantees are required. Real property will be appraised in accordance with FIRREA; chattels will be evaluated in accordance with normal banking practices.
Contact: Applications are made by the lender and business and submitted to the Rural Development State Office. For further information, call (208) 378-5623.
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