Commercial Loans Blog

USDA Commercial Loans and Mixed Use Properties

Posted by George Blackburne on Thu, Jun 3, 2010

Will the USDA Guarantee Commercial Loans Where There Are Some Residential Units on the Property?

USDA commercial loans are terrific deals, if a commercial property qualifies. Certainly motels, hotels, restaurants, office buildings, retail buildings, strip centers and industrial buildings qualify.

However, apartment buildings do NOT qualify. The purpose of a USDA commercial loan is to promote the growth of businesses and industries in rural areas. Mere rental housing is not considered a business or industry for the purposes of this program.

But what about a mixed use property, such as apartments over several storefronts? You'll find a great many mixed use buildings in the center of most older towns. Do these properties qualify for a USDA commercial loan?

I asked this question of a USDA commercial lender. Here is his response:

[There is no blanket rule. Each property would be looked at on a] case by case basis, depending on the amount of mixed use. Some state offices are more open to it than others. Generally, the residential component has to be small compared to the rest of the project. If the residential portion is more than 50% [of the total square footage or scheduled rents], it would not work.


Need a USDA commercial loan right now? Please call Tom Blackburne at 574-210-6686 or email him at tommy@blackburne.com.

Topics: USDA commercial loan, USDA commercial lender

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 tommy@blackburne.com.


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 tommy@blackburne.com.

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