USDA B&I Program Overview
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Summary
The USDA Business & Industry (B&I) Guaranteed Loan Program is to improve, develop, or finance business, industry, and employment and improve the economic and environmental climate in rural communities. B&I loans facilitated through Legis Commercial Capital (LCC) will be primarily used for the acquisition or refinance of commercial real estate. Other B&I eligible uses of proceeds such as working capital and equipment acquisition financing can be considered by LCC in conjunction with a commercial real estate loan request. B&I loans are secured by a 1st Deed of Trust/Mortgage on commercial real estate, meeting USDA qualifications, with a maximum Loan to Value of 80%.
Eligibility
• A borrower must be engaged in or proposing to engage in a business that will:
• Provide employment
• Improve the economic or environmental climate
• Promote the conservation, development, and use of water for aquaculture
• Reduce reliance on nonrenewable energy resources by encouraging the development and construction of solar energy systems and other renewable energy systems.
• Borrowing entity must reside in a community (MSA) of 50,000 or less as determined by the most recent U.S. Census. Contact LCC directly for assistance in determining the eligibility of your property.
• Borrower must have tangible balance sheet equity at the loan closing of no less than 10% – 20% for existing businesses, 20% for new businesses, and 40% for energy or bio-based businesses.
Maximum Loan Amount
• $5,000,000
Maturity and Amortization*
• Real Estate – Up to 30 years
• Equipment Acquisition – Up to 15 years
• Working Capital – Up to 7 years
*(Blended maturity and amortization will be applied depending on final structure as determined by B&I guidelines)
Maximum LTV
• Real Estate – Up to 80% LTV
• Equipment Acquisition, Working Capital, Debt Refinancing – Up to 60% LTC
USDA B&I Eligible Use of Proceeds
• Purchase and development of land, easements, rights-of-way, buildings or facilities.
• Business conversion, enlargement, repair, modernization, or development.
• Purchase of equipment, machinery, or inventory.
• To refinance existing business indebtedness that is not already structured with reasonable terms and conditions.
Eligible Property Types
• Office: Professional, Condominium, Medical, Dental, and Veterinarian.
• Industrial: Heavy and Light Manufacturing, Warehouse and R&D Flex
• Retail: General
• Special Use: Assisted Living Facilities, Adult Care, Day Care Facilities, Restaurants, Funeral Homes, Hotels/Motels.
Rate Option / Fees
Interest rates are generally adjustable based loans, tied to the Prime Index rate. Maturities up to 30 years are available based on use of loan proceeds. The USDA collects a 2% guarantee fee on the guaranteed portion of the loan. A 0.25% renewal fee is assessed annually based on the outstanding principal balance.
Underwriting Requirements
• Prior Ownership and Management Experience
• Minimum FICO of 680
• All loans are Full Recourse and require the personal guarantee of any and all individuals or entities holding 20% ownership interest or more.
• 1.25x Minimum Debt Coverage Ratio (DCR) for the most recent FYE and Interim period is required.
Occupancy
The subject property DOES NOT have to be owner occupied so the program can be used for investor properties.