Commercial Loans Blog

USDA B&I Loan Rates and Terms

Posted by George Blackburne on Wed, Jun 2, 2010

So What Do B&I Lenders Typically Charge on a Rural Commercial Loan (Business & Industries Loan)?

Do you need a commercial loan on a motel or other commercial property located in a rural area? (Unfortunately apartments don't qualify for a B&I guarantee.) Are you ready to get started right now? Please call Tommy Blackburne at 574-210-6686 or email him at [email protected].


What do Business and Industries loans typically cost?

Rate: Prime + 2.75% to Prime + 3% floating, readjusted quarterly (as of 6/2/10 the prime rate was 3.25%, so we're talking about a floating rate loan between 6.0% and 6.25% today). If the deal is really strong and the property is NOT a special use property, it might be possible to get Prime + 2.50%.

Floor: 6.5% Higher if the deal is weak.  Please note that this makes the floor higher than the nominal rate (Prime + 2.75%), so the loan would start out at 6.5%. The margin over prime would therefore only become relevant if the prime rate increased, which many economists would argue is somewhat unlikely in the near term.

Ceiling: None.

Points: 1-2 to the lender plus 1-2 points for your mortgage broker.

Amortization: 25 years fully-amortized.

Prepayment penalty: Minimum of 5% for five years.  The lender might agree to a slightly lower rate if the borrower agrees to a 10% prepayment penalty for ten years that declines by 1% per year.

Assumability: The loan documents are usually silent on the subject, giving the lender the flexibility to allow an assumption for a strong buyer of the business or to deny the assumption. The original borrower usually remains secondarily liable.


Do you need a commercial loan on a motel or other commercial property located in a rural area? Unfortunately apartments don't qualify for a B&I guarantee.) Are you ready to get started right now? These USDA business and industries loans are a terrific deal. Please call Tom Blackburne at 574-210-6686 or email him at [email protected].

Topics: USDA B&I Loan, USDA Business and Industries loan

Business and Industries Loans (B&I Loans) from the USDA

Posted by George Blackburne on Wed, May 26, 2010

It's a Terrific Commercial Loan Program if Your Property is Located in a Small Town

The USDA Business and Industries Loan (B & I Loan) Program is a Federal loan guarantee program that is designed to encourage the commercial financing of rural businesses. The reason why the Federal government is involved is because it wants to create and save rural jobs and improve the economic and environmental climate of rural communities.


Are you ready to apply for a USDA B&I loan? Please call Tom Blackburne at 574-210-6686 or email him at [email protected].


Here's what makes a B&I loan different: The Business & Industry Loan program is lender-driven. The USDA guarantees the loan rather than lending directly. A commercial lender requests the B & I guarantee, and, if it is approved, the commercial lender makes and services the loan.

The benefits of the B & I Guaranteed Loans Program for businesses is that the borrower gets a higher loan amount. The reason why is because the guarantee strengthens the loan application, allowing the bank to feel comfortable with a smaller equity injection.

B&I loans also offer lower interest rates and longer repayment terms. This greatly assists businesses that may not qualify for conventional commercial real estate financing, which provides the rural business greater stability and leads to greater growth, expansion and rural employment.

Below is a list of the authorized uses of the loan funds. A borrower must be engaged in, or proposing to engage in, a business that will (1) Provide employment; (2) Improve the economic or environmental climate; (3) Promote the conservation, development, and use of water for aquaculture; or (4) Reduce reliance on nonrenewable energy resources by encouraging the development and construction of solar energy systems, and other renewable energy resources.

Authorized Loan Purposes:

(1) Business and industrial acquisitions, construction, conversion, expansion, repair, modernization or development costs.

(2) Purchase of equipment, machinery or supplies.

(3) Start-up costs and working capital.

(4) Processing and marketing facilities.

(5) Pollution control and abatement.

(6) Refinancing for viable projects, under certain conditions.

(7) Purchase of start-up cooperative stock for family sized farms where commodities are produced to be processed by the cooperative.

Bottom line, the USDA Building and Industry Loan (B&I Loan) program is a terrific program if the commercial property is located in a town of less than 50,000 residents. A great many small motels are financed using the B&I loan program.


Are you ready to apply for a USDA B&I loan? Please call Tom Blackburne at 574-210-6686 or email him at [email protected].

Topics: business and industries loan, rural commercial loan, USDA B&I Loan, USDA Business and Industries loan, USDA commercial loan, USDA lender, USDA loan, B&I commercial loan, B&I lender, B&I loan