By Jeff Rauth. Email Here or 248 885-8797. SBA Loan Officer at a Bank That Lends Nationally. 15 Years Commercial Real Estate Experience. Past Commercial Mortgage Broker.
The USDA B & I loans (United States Department of Agriculture, Business and Industry) were set up in an effort to improve rural communities, by providing capital to assist business in the creation of and saving jobs.
Securing financing in small towns is often a very difficult tasks as most national and regional banks will NOT lend to borrowers with commercial real estate located in communities with less than 50,000 people. This program fills that void.
The benefits with the USDA Business and Industry program are many. Higher leverage (Up to 80%), and long amortization schedules top the list. Loan amounts can go up to $10,000,000 and higher. B & I loans are often amortized over 30 years, which can have a dramatic increase in cash-flow compared to a more typical 20 year schedule. Also the B and I loans never have balloon clauses and have a higher guarantee than comparable SBA loans.
Underwriting Criteria for USDA B and I Loans
- Any legal entity including individuals, public and private organizations and federally recognized Indian Tribal Groups.
- There is no size restriction on the business
- Click here to enter in your property address to see if it is eligible: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=rbs
Use of Proceeds:
- B&I Loans may involve acquisitions, construction, conversion, repair, modernization or debt refinance.
- Loan proceeds can be used for real estate acquisition and/or improvements, machinery, equipment, furniture, fixtures and working capital. Closing costs and guarantee fees are also eligible. Meaning you can roll the closing costs into the loan amount.
- All B&I loans are fully amortized with no balloons or call dates.
- Repayment terms are up to 30 years for real estate and improvements, up to 15 years (or useful life) for machinery, equipment, furniture and fixtures and up to 7 years for working capital.
- Rates are based on a spread over the Prime Rate. Rates vary depending on the specific strengths of the transaction.
Like all commercial real estate loans, the key is knowing which banks are really funding loans and which to not waste your time with.