USDA Commercial Loan: The Best Loan Program for Your Rural Business

12


There are numerous ways to develop or expand your business, such as creating additional branches, improvement of machinery or equipment, and higher quality supplies to name a few.

However,
working capital is needed to fund business expansion, and unless you have extra
cash, debt financing would be your best option. One of the best loan programs
in the market today is the USDA
commercial loan
.

What is the USDA Commercial Loan?

The USDA
commercial loan, also known as the USDA Business & Industry (B&I) Loan Program, is an
asset-based loan guaranteed by the United States Department of Agriculture
(USDA). It was created to help rural businesses grow and strengthen the economy
of their local communities.

According
to the USDA, for-profit businesses, non-profits, and cooperatives are
qualified for this type of guaranteed loans. These commercial loans can be used
for business modernization, purchase of land and supplies
(or inventory), debt refinancing, and business acquisitions.

Interest Rates

The
interest rates of USDA business loans depend on several factors, such as your
credit score, business revenue, the age of the business, and the collateral for
the loan. But historically, the USDA charges low-interest rates on business
loans, which can go lower depending on the negotiation with your chosen lender.

Reasonable Collateral Requirement

Collateral
requirements for USDA business loans have one of the most reasonable values.
The following are the maximum discounted value for collateral:

  • Real Estate: 80% of the fair market
    value.
  • Equipment: 70% of the fair market
    value.
  • Accounts Receivable: 60% of the book value.
  • Inventory: 60% of the book value.

Flexible Loan Terms

According
to the USDA, the maximum term on real estate is 30 years, while the
maximum term on machinery and equipment could be up to 15 years.

These
loan terms could still be improved and adjusted to fit your financial needs if
you apply for a USDA business loan with a specialized commercial lender.

Reasonable Fees

The
initial guarantee fee for a USDA business loan is 3% of the guaranteed amount.
At the same time, there is an annual renewal fee, which is 0.5% of the
outstanding principal, and both are reasonable fees compared to other loan
programs in the market. You can also get a good deal on customary fees upon
your negotiation with your chosen lender.

Security

Since
the US government is a part of this loan program, you can rest assured that you
will be treated fairly with the utmost security and that you have minimal to
zero chance of experiencing fraud.

USDA
business loans, from the reasons mentioned above, is without a doubt, the best
loan program for your business; applying for this loan is undoubtedly a
significant step in growing your business.

Contact
a specialized commercial lender today to apply for a loan program, and be part
of the USDA’s goal in strengthening rural economies through business
development.

About The Author

vipul

Vipul is a professional blogger and online advertiser based out of Bengaluru, India. Always in a quest for new ways to make money, Vipul detail out all possible opportunities that can help anyone to earn passive income online. You can connect on Twitter, Linkedin & Facebook





Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here