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USDA LOANS
This program allows for loans up to $25,000,000 for most types of industries, except production agriculture and golf courses. (Aquaculture is eligible.) There is no business size limitation for this program or test for other credit; however, the business must be located in a rural area or in most cities with a population of less than 50,000.
Other requirements of the program include tangible balance sheet equity at closing. (10 percent for an existing business and 20 percent for a new business.) The equity must be developed in accordance with generally accepted accounting practices. Feasibility studies may be required.
The business must be 51 percent U.S. owned (or admitted for permanent residency).
Real estate loans may be made to 30 years, equipment to 15 years and working capital to 7 years, depending upon the life of the security.
Most loans are under $10,000,000 and can be guaranteed up to 80 percent of the entire loan. If the loan is less than $5,000,000, it can be guaranteed up to 80 percent. If under $10,000,000, the loan can be guaranteed up to 70 percent. Up to 60 percent can be guaranteed if the loan is over $10,000,000.
Rates can be fixed or variable and can vary no more than quarterly. Rates are negotiated between the lender and the business and should be similar to those rates customarily charged to other borrowers in similar circumstances.
Loans must be adequately secured considering normal discount factors.
Personal and corporate guarantees are normally required. |
