SBA and USDA Rural Development Loan Programs
Small Business Administration Loans
SBA Loans are loans designed for small and large businesses that are guaranteed by the Small Business Administration . SBA Loans feature lower down payments and longer terms than most loan options and are offered through local financial institutions. A SBA Loan has a majority percentage of the loan guaranteed by the Small Business Administration, enabling businesses that would normally not qualify for a regular to receive financing. Nearly 90% of all businesses are eligible for an SBA loan.
Advantages of an SBA Loan:
- SBA loans require less money down
- Longer payback terms
- Lower interest rates
- Lower monthly payments
- Most loans have no prepayment penalty
Types of SBA Loans:
- Purchase an existing business or franchise
- Purchase real estate
- Building
- Purchase fixed assets such as heavy machinery and specialized equipment
- Working capital
- Revolving lines of credit
Basic requirements:
- Must be an owner-operated business.
- Must be a for-profit business.
- Sole-proprietorship, corporation or professional partnership.
Business types include the following:
- Manufacturers
- Retailers
- Seasonal Businesses
- General & Trade Construction Companies
- Agricultural Companies
- Professional Services such as Doctors, Dentists and Veterinarians
There are five steps in getting your SBA loan:
- Initial consultation
- Submit the loan application
- Bank approval
- Submit the loan to the SBA for approval
- Close the loan
USDA Rural Development Loan Program
Business and Industry Guaranteed Loans (B &I)
The purpose of the Business and Industry loan program is to improve, develop or finance business, industry and employment and improve the economic and environmental climate in rural communities with a population of 50,000 or more and its immediate adjacent urbanized or urbanizing area by guaranteeing quality loans which will provide lasting community benefits.
Eligible Loans:
- Construction
- Renovation and development
- Purchase land and buildings
- Machinery and equipment
- Pollution control and abatement
- Startup costs and working capital (not line of credit)
- Processing and marketing facilities
Ineligible Loans:
- Pay off a creditor in excess of value of collateral
- Payment to owner, partner, stockholder or beneficiary of applicants who will retain equity in the business
- Projects exceeding $1 million and increase in direct employment of 50 or more which results in transfer of employment from one area to another or results in excess of production of goods or services in the area
- Transfer of ownership of a business (except certain cases)
- Assistance to government employees and military personnel owning 20 percent or more of the business or any illegal business activity.
Eligible borrowers:
- Profit and nonprofit corporations,
- Cooperatives and trusts
- Individuals
- Municipality, county or other political subdivisions
- Federally recognized Indian tribal groups dealing in manufacturing, retail, wholesale or services.
Ineligible borrowers:
- Owner occupied housing
- Race tracks and golf courses
- Lending/investment institutions
- Insurance companies
- Charitable institutions
- Church controlled organizations
- Fraternal organizations
- Business establishments when more than 10 percent of annual gross revenue is from gambling activities.
http://www.rurdev.usda.gov/wa/BUSB&IGL.htm
