Qualifications for Rural Development Business and Industrial Loan

The Rural Development Business and Industrial Loan is a rural loan specifically designed for businesses, nonprofit organizations or public agencies in rural communities. The USDA created these loans to encourage business growth in smaller communities.

What Kind Of Businesses Are Eligible?

The USDA grants its rural loans to many different types of entities. Any kind of corporation in an rural area may apply, as well as a partnership, trust, or cooperative. Both for-profit and non-profit organizations can apply for USDA Rural loans. Federally recognized Indian tribes may also apply. In addition, people who are self-employed can apply as individuals. Even a town or county can apply for USDA rural business loan. 

Who Is Eligible?

The USDA’s Rural Development rural loans are only for applicants in one of the fifty United States, Puerto Rico, the Virgin Islands, Guam, American Samoa, or the Northern Mariana Islands. Some loans are also available for organizations in Palau, Micronesia, and the Marshall Islans. The loan must be for a business or organization doing business in a rural area; the USDA defines a rural area as any small town with a population of 50,000 or less. 

In all cases, all applicants must either be United States citizens, or be legal permanent residents of the United States. In the case of corporations, at least 51 percent of the owners must be citizens or legal residents to qualify.

What Kinds of Uses Qualify For A Loan?

As the name suggests, the USDA’s Business and Industrial Loan is designed to promote business development in rural areas. Applicants must demonstrate that they will be using the loan for a purpose that will promote the growth of their own business, or will contribute to economic growth in their community. For example, a farmer may apply for a loan to purchase more farmland. A textile mill could use the funds to purchase new equipment, or refurbish existing equipment, to increase their production. A small town could apply for the funds to build a fire station or police station. The USDA also approves loans for projects which could create new jobs in a community.

Are There Any Businesses That Are Not Eligible?

Some types of organizations are not eligible for the USDA’s rural loans. For example, charitable institutions may not apply.  USDA rural loans may not be used to build hotels, churches, tourist centers, golf courses, or amusement parks. If more than 10 percent of any business’s income comes from gambling, it also may not apply for a USDA loan. You also may not use this particular loan to build an apartment complex or other multi-family housing unit – however, other USDA rural loans are available for building housing units in rural areas.

How Do I Apply?

To apply for a USDA Rural loan, or to speak with an agent about your eligibility, you must contact your nearest USDA Rural Development State Office.