Additional $1 Billion in Loan Guarantees for Rural Businesses and Ag Producers

Business and Industry CARES Act Program
(Announced May 21, 2020, funding expires Sept. 30, 2021)

U.S. Secretary of Agriculture Sonny Perdue announced that USDA is making available up to $1 billion in loan guarantees to help rural businesses meet their working capital needs during the coronavirus pandemic. Additionally, agricultural producers that are not eligible for USDA Farm Service Agency loans may receive funding under USDA Business & Industry (B&I) CARES Act Program provisions included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The changes allow USDA to:

  • Provide 90 percent guarantees on B&I CARES Act Program loans;
  • Set the application and guarantee fee at two percent of the loan;
  • Accept appraisals completed within two years of the loan application date;
  • Not require discounting of collateral for working capital loans, and
  • Extend the maximum term for working capital loans to 10 years.

Applications will be processed in the order they are received.

Wednesday, May 27 at 2:30 PM CT

Wednesday, June 3 at 1:00 PM CT

To Apply:

Contact the USDA Rural Development State Office where your project is located. A list of state offices can be found at

Available Funds:

The CARES Act provides $20,500,000 in budgetary authority for this program through September 30, 2021, which will support approximately $951,000,000 in loan guarantees in accordance with the credit subsidy scoring based on the provisions of this Notice. The aggregate total amount of loans for agricultural production will initially be limited to 50 percent of the total amount of program level of B&I CARES Act Program, approximately $475,500,000. The Agency may publish future notices in the Federal Register revising the limitation of the amount of funding made available for loans for agricultural production to align with the demand for these loans.

Eligible Use of Funds:

Guaranteed loans will be limited to loans for working capital loan purposes. Loan proceeds may be used only to support facilities and business operations, including certain agricultural producers in rural areas that were in operation on February 15, 2020. Loan proceeds must be disbursed through multiple draws on an as-needed monthly basis.

Eligible Areas:

Applicants can use this eligibility tool.

  • Rural areas outside of a city or town with a population of fewer than 50,000 people.
  • The borrower’s headquarters may be based within a larger city as long as the project is located in an eligible rural area.
  • The lender may be located anywhere in the United States.
  • Projects may be funded in rural and urban areas under the Local and Regional Food System Initiative. Check eligible addresses for Business Programs.

Lenders That Can Apply:

  • Federal or state-chartered banks.
  • Savings and loans.
  • Farm credit banks.
  • Credit unions.

Borrowing Restrictions:

  • Loans may be used only to support rural businesses, including agricultural producers, that were in operation on Feb. 15, 2020.
  • Individual borrowers must be citizens of the United States or reside in the U.S. after being legally admitted for permanent residence.
  • Private-entity borrowers must demonstrate that loan funds will remain in the U.S.

Loan Terms:

  • Maximum term is 10 years.
  • Loans must be fully amortized; balloon payments are not permitted.
  • Interest-only payments may be scheduled in the first 3 years.

Interest Rates:

  • Interest rates are negotiated between the lender and borrower, subject to Agency review.
  • Rates may be fixed or variable.
  • Variable interest rates may not be adjusted more often than quarterly.

Applicable Fees:

  • There is an initial guarantee fee is 2 percent of the guaranteed amount.
  • There is an annual renewal fee, currently 0.5 percent of outstanding principal.
  • Reasonable and customary fees are negotiated between the borrower and lender.

Underwriting and Security Requirements:

  • The proposed operation must have a realistic repayment ability.
  • The business and its owners must have a good credit history.
  • Key person life insurance may be required, and the amount negotiated. A decreasing term life insurance is acceptable.
  • Personal and corporate guarantees are normally required from all proprietors, partners (except limited partners) and major shareholders (all those with a 20 percent or greater interest).

Funds May Not Be Used For:

  • Purchase and development of land, buildings, and associated infrastructure for commercial or industrial properties, including expansion or modernization;
  • Business acquisitions;
  • Leasehold improvements;
  • Constructing or equipping facilities;
  • Purchase of machinery and equipment; and
  • Debt refinancing unless such debt refinancing is for debts incurred subsequent to February 15, 2020, for eligible purposes.
  • Lines of credit.
  • Owner-occupied and rental housing.
  • Golf courses.
  • Racetracks or gambling facilities.
  • Churches, church-controlled organizations or charitable organizations.
  • Fraternal organizations.
  • Lending, investment and insurance companies.
  • Projects involving more than $1 million and the relocation of 50 or more jobs.
  • Agricultural production, with certain exceptions (1).
  • Distribution or payment to a beneficiary of the borrower or an individual or entity that will retain an ownership interest in the borrower.