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 tommy@blackburne.com.


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 tommy@blackburne.com.

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