Business and Industry CARES Act Program

PROGRAM STATUS: Open

APPLICATION DEADLINE: September 15, 2021, or until funds made available for this purpose are expended.

What does this program do?

This program offers loan guarantees to lenders for their loans to rural businesses and agricultural producers to supplement their working capital to prevent, prepare for and respond to the economic impacts of the coronavirus.

What lenders may apply for this program?

Lenders need the legal authority, financial strength and sufficient experience to operate a successful lending program.
This includes:

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

Who may qualify for these guaranteed loans?

  • For-profit businesses.
  • Nonprofits.
  • Cooperatives.
  • Federally-recognized Tribes.
  • Public bodies.

What are the 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.

What is considered an eligible area?

  • 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.

How may guaranteed loan funds be used?

Eligible uses are:

  • Loans must be used as working capital to prevent, prepare for or respond to the effects of the coronavirus pandemic.

What guaranteed loan 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 was incurred subsequent to February 15, 2020 and used for eligible working capital purposes in compliance with the B&I CARES Act Program.
  • 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 (Agricultural production is not an eligible loan purpose unless the project is not eligible for financing through the USDA Farm Service Agency.)
  • Distribution or payment, including loan payments, to an owner or beneficiary of the borrower.

What Collateral Is Required?

Collateral must have documented value sufficient to protect the interest of the lender and the Agency. The collateral value must be at least equal to the loan amount. Hazard insurance is required on collateral (equal to the loan amount or depreciated replacement value, whichever is less).

What is the percentage of a loan guarantee?

  • 90 percent for all loans.

What are the loan terms?

  • Maximum loan term is 10 years.
  • Loans must be repaid in full and amortized by the maturity date; balloon payments are not permitted.
  • Interest payments may be deferred in the first year; principal payments may be deferred for up to 3 years.

What are the 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.

What are the applicable fees?

  • There is an initial guarantee fee equal to 2 percent of the guaranteed amount.
  • There is an annual renewal fee of 0.5 percent of the outstanding principal balance calculated at December 31 of each year.
  • Reasonable and customary fees are negotiated between the borrower and lender.

What are the 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).

How do we get started?

  • Applications are accepted from lenders through USDA local offices year-round.
  • Interested borrowers should inquire about the program with their lender.
  • Lenders interested in participating in this program should contact the USDA Rural Development Business Programs Director in the state where the project is located.

Who can answer my questions?

Contact the local office that serves your area.

What law governs this program?

  • Loan Processing – Code of Federal Regulations, 7 CFR 4279-A and B. Provisions of the B&I CARES Act Program are contained in 7 CFR 4279.190.
  • Loan Servicing – Code of Federal Regulations, 7 CFR 4287-B.
  • This program is authorized by the Consolidated Farm and Rural Development Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Why does USDA Rural Development do this?

This program provides working capital to help rural businesses prevent, prepare for or respond to the effects of the coronavirus pandemic.

NOTE: Because information on this page may change, please always consult the program instructions listed in the section above titled “What law governs this program?” You may also contact your local office for assistance.

To apply, 

  • Lenders interested in participating in this program should contact the USDA Rural Development Business Programs Director in the state where the project is located.
  • Interested borrowers should inquire about the program with their lender.
  • Potential applicants can use our program eligibility tool  to determine if a project is in an eligible area.

Instructions

Forms

NOTE: Adobe Acrobat 8 or higher is required to access the following forms:

Interest Rates:

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

All borrowers must have been in operation on February 15, 2020 to be eligible for the B&I CARES Act Program.  All borrowers must meet capital and equity requirements which include either a 10 percent balance sheet equity, or a borrower investment of equity or other funds into the project equal to 10 percent or more of the eligible project costs.  The capital and equity requirements are stated in 7 CFR 4279.190(k).

USDA held two webinars for external stakeholders to provide an overview of the Business and Industry Loan Guarantee CARES Act Program requirements.

Past Webinars:  

Contact a local Rural Development office.