In order to help small businesses grow and compete in a market in which it is tough to get credit without already being big, the government founded the Small Business Administration. There are many specialized programs aimed to help particular types of businesses and business owners. The purpose of this article is to discuss the Rural Business Loans available.
In order to stimulate local economic development, especially in communities facing economic dislocation, high unemployment, and population loss, the SBA sponsors the Small/Rural Lender Advantage initiative. This program streamlines and simplifies the loan application process. It covers loans of up to $350,000. The application is one two-sided page with simple requests for additional information for any loan over $50,000. Loans under $150,000 are guaranteed 85%, and loans over $150,000 are guaranteed 75%. Processing is completed within 5 days at most, and as little as three days, through the Standard 7(a) Loan Processing Center.
The U.S. Department of Agriculture, or USDA, offers a Business and Industry (B&I) Guaranteed Loan Program, which aids businesses located in rural communities. These loans may be used for debt refinancing, machinery, equipment, buildings, real estate, working capital, business and industrial acquisitions, construction, conversion, expansion, repair, modernization, development, supplies, start-up costs, or pollution control and abatement. It must be for a rural community of under 50,000; areas with less than 25,000 residents receive priority. Unlike most SBA loans, there is no restriction on the business size. The loans are guaranteed 80% for amount no more than $5 million, 70% for amounts less than $10 million, and 60% for amounts up to $25 million. Property usually serves as collateral and must be appraised in order to apply. Repayment terms vary depending on the use of the funds. The lending institution pays a single fee of 2% of the guaranteed principal amount, which it may transfer to the borrower.
If you have a business operating in a rural area, you may want to consider a Rural Business Loan. If this is not applicable to you, they still has many resources available to meet the needs of all types of unique small businesses, and chances are they have a special program that applies to your business. If you would like a loan, contact a lender that works with the SBA to see which programs you qualify for.