USDA Commercial Loan: The Best Loan Program for Your Rural Business


There are numerous ways to develop or expand your business, such as creating additional branches, improvement of machinery or equipment, and higher quality supplies to name a few.

commercial loans USDA Commercial Loan: The Best Loan Program for Your Rural Business

However, working capital is needed to fund business expansion, and unless you have extra cash, debt financing would be your best option. One of the best loan programs in the market today is the USDA commercial loan.

What is the USDA Commercial Loan?

The USDA commercial loan, also known as the USDA Business & Industry (B&I) Loan Program, is an asset-based loan guaranteed by the United States Department of Agriculture (USDA). It was created to help rural businesses grow and strengthen the economy of their local communities.

According to the USDA, for-profit businesses, non-profits, and cooperatives are qualified for this type of guaranteed loans. These commercial loans can be used for business modernization, purchase of land and supplies (or inventory), debt refinancing, and business acquisitions.

Interest Rates

The interest rates of USDA business loans depend on several factors, such as your credit score, business revenue, the age of the business, and the collateral for the loan. But historically, the USDA charges low-interest rates on business loans, which can go lower depending on the negotiation with your chosen lender.

Reasonable Collateral Requirement

Collateral requirements for USDA business loans have one of the most reasonable values. The following are the maximum discounted value for collateral:

  • Real Estate: 80% of the fair market value.
  • Equipment: 70% of the fair market value.
  • Accounts Receivable: 60% of the book value.
  • Inventory: 60% of the book value.

Flexible Loan Terms

According to the USDA, the maximum term on real estate is 30 years, while the maximum term on machinery and equipment could be up to 15 years.

These loan terms could still be improved and adjusted to fit your financial needs if you apply for a USDA business loan with a specialized commercial lender.

Reasonable Fees

The initial guarantee fee for a USDA business loan is 3% of the guaranteed amount. At the same time, there is an annual renewal fee, which is 0.5% of the outstanding principal, and both are reasonable fees compared to other loan programs in the market. You can also get a good deal on customary fees upon your negotiation with your chosen lender.


Since the US government is a part of this loan program, you can rest assured that you will be treated fairly with the utmost security and that you have minimal to zero chance of experiencing fraud.

USDA business loans, from the reasons mentioned above, is without a doubt, the best loan program for your business; applying for this loan is undoubtedly a significant step in growing your business.

Contact a specialized commercial lender today to apply for a loan program, and be part of the USDA’s goal in strengthening rural economies through business development.

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