The USDA’s Business & Industry (B&I) program is the federal government’s other big guaranteed business loan — and the least understood. Where SBA loans run through thousands of lenders and dominate search results, B&I quietly guarantees larger, longer loans for one specific purpose: creating and saving jobs in rural America. This page translates the program the way a borrower experiences it: you never apply to the USDA at all, the guarantee percentage most sites print is retired, and the collateral rules are the opposite of the folklore around guaranteed loans.
General information, not financial advice. Program terms below are from USDA Rural Development’s B&I program page (updated June 2026) and 7 CFR Part 5001; the guarantee percentage is reset annually by Federal Register notice — confirm the current fiscal-year figures before relying on them.
USDA Rural Development does not make B&I loans. It guarantees a portion of a loan made by an approved lender — a federal or state-chartered bank, savings and loan, Farm Credit bank, credit union, or an approved non-regulated lender. The lender originates, services and collects the loan; the lender submits the application through a USDA Rural Development state office. Applications are accepted year-round, within the federal fiscal year (October 1–September 30). So the borrower’s first step is the one USDA’s own program page gives: find a participating lender and start there. If a lender has never done a B&I loan, the USDA guarantee is not something you can route around them to get.
The guarantee percentage is published annually. For B&I loans approved in fiscal year 2026: applications requesting less than $5,000,000 receive an 85% guarantee; loans of $5,000,000 or more receive 80% (USDA announcement, March 27, 2026 — raised from the year before). This is the single most-garbled fact about the program: the tiered 80%/70%/60% table reproduced in older USDA PDFs and most lender explainers is retired under the current OneRD rules (7 CFR Part 5001, which superseded the old B&I regulation). If a page quotes you three tiers, it is quoting a dead rulebook — and because the percentage resets each fiscal year, pull the current notice before structuring a deal around it.
Size limits: total B&I loans to one borrower — guaranteed and unguaranteed portions combined, including existing B&I balances — generally cap at $25 million. The USDA Administrator may approve up to $40 million for rural cooperative organizations processing value-added agricultural products.
Collateral. B&I is a fully collateralized program. The discounted value of the collateral must be at least equal to the loan amount, and hazard insurance is required. Whatever you have heard about guaranteed loans being light on collateral, it does not apply here — the guarantee protects the lender against loss, it does not waive the security.
Equity. The borrower must carry a tangible balance-sheet equity position under 7 CFR Part 5001 — the regulation’s long-standing standard is 10% for an existing business and 20% for a new business. A thin-equity borrower is not a B&I candidate until the balance sheet says otherwise.
Eligibility turns on where the project sits. The project must be in a rural area — outside a city or town with a population over 50,000 and outside its contiguous and adjacent urbanized area. Your headquarters may be in a larger city if the project itself is rural, and the lender may be located anywhere in the United States. USDA publishes an address-eligibility checker for its Business Programs — run the project’s actual address through it before assuming either way.
Eligible borrowers include for-profit and non-profit businesses, cooperatives, federally recognized Tribes, public bodies, and individuals engaged (or proposing to engage) in business. One rule deserves precision because it differs from the SBA’s: under USDA’s own standard, individual borrowers must be U.S. citizens or legally admitted permanent residents, and private-entity borrowers must show the funds will remain in the U.S. and the facility will primarily create or save jobs for rural U.S. residents. Do not import the SBA’s stricter March 2026 citizens/nationals-only rule into this program — USDA’s is its own.
Eligible uses: business conversion, enlargement, repair, modernization or development; land, buildings and infrastructure; machinery, equipment, supplies and inventory; acquisitions that keep operations running and create or save jobs; and debt refinancing only when it improves cash flow and creates jobs.
Prohibited uses (program page): lines of credit; owner-occupied and rental housing; golf courses; racetracks and gambling facilities; churches and church-controlled organizations; fraternal organizations; lending, investment and insurance companies; and distributions or payments to owners. Agricultural production is generally excluded, with narrow exceptions (vertically integrated operations that don’t qualify for FSA farm loans, and commercial nurseries, forestry and aquaculture, are eligible). The jobs test frames everything: a use that doesn’t credibly create or save rural jobs is not what this guarantee is for.
Who may qualify for a USDA B&I guaranteed loan? For-profit and non-profit businesses, cooperatives, federally recognized Tribes, public bodies and individuals engaged in business — provided the project is in an eligible rural area, the loan is fully collateralized, the borrower carries the required equity position (10% existing / 20% new under 7 CFR Part 5001), and the project creates or saves rural jobs. Individual borrowers must be U.S. citizens or legally admitted permanent residents under USDA’s own rule.
What is the maximum loan guarantee percentage? For fiscal year 2026, 85% of a loan requesting less than $5,000,000 and 80% at $5,000,000 or more, as published by USDA’s Federal Register notice. The older 80%/70%/60% tiered table is retired. The percentage is reset annually, so confirm the current fiscal-year figure before structuring a deal.
How do we get started with a USDA business loan? Through a lender. USDA guarantees B&I loans but does not make them: an approved lender originates the loan and submits the application through a USDA Rural Development state office, and applications are accepted year-round. Start by finding a lender willing to do a B&I loan, and check the project address in USDA’s eligibility checker.
What can USDA B&I loan funds be used for — and not used for? Funds can pay for business development and modernization, land and buildings, machinery and equipment, inventory, qualifying acquisitions, and refinancing that improves cash flow and creates jobs. They cannot fund lines of credit, housing, golf courses, gambling facilities, churches, fraternal organizations, lending or insurance companies, or distributions to owners.
General information, not financial advice. Sources: USDA Rural Development B&I program page (updated 2026-06-25) and FY2026 guarantee announcement (March 27, 2026); 7 CFR Part 5001 (OneRD Guarantee Loan Initiative). Currency verified 2026-10-23.