USDA Business and Industry (B&I) Loan Requirements
USDA B&I equity requirements are set by 7 CFR 5001.105(d): a minimum of 10 percent for an existing business, 20 or 25 percent for a new business without qualifying sales contracts, and 25 percent on either route when a new business's lender will request the loan note guarantee before construction is complete. On $4,000,000 of total eligible project cost, 25 percent is $1,000,000 where 20 percent would be $800,000. The tangible equity wording is 7 CFR 4279.131, in a subpart that 7 CFR 4279.101 says "is no longer used for loan processing requirements for Business and Industry (B&I) loans guaranteed by the Agency" other than CARES Act loans. Standard-fee loans under $5 million obligated in fiscal year 2026, which ended on 30 September 2026, carried an 85 percent guarantee. No fiscal year 2027 notice had been published on 10 October 2026.
General information, not legal or lending advice. We are not a lender, attorneys or USDA. The Agency, USDA Rural Development, decides eligibility, may raise the equity requirement or, for an existing business, reduce it, and sets the scope of a required feasibility study. Confirm your address, equity test and fee rates with your lender and your Rural Development State Office.
Which regulation sets USDA B&I loan requirements?
7 CFR part 5001, the OneRD guaranteed loan regulation, for every complete application received on or after 1 October 2020 (7 CFR 5001.1(b)). The old B&I rule, at 7 CFR 4279.101, points regular B&I loans to part 5001.
A common error is to quote the old equity sentence, 7 CFR 4279.131(d)(1), which opens "A minimum of 10 percent tangible balance sheet equity" and sits in a subpart that now holds loan processing rules only for CARES Act loans. 7 CFR 5001.105(d) drops the word tangible, has four borrower rows where the old paragraph had existing, new and energy-project tiers, and lists minimums up to 25 percent, which the Agency may raise under (d)(5)(i).
What counts as a rural area for a B&I loan?
Any area of a State outside a city or town of more than 50,000 people and outside the urbanized area contiguous and adjacent to one, by the latest decennial census and subject to the exclusions the definition lists (7 CFR 5001.3, matching 7 U.S.C. 1991(a)(13)(A)). The definition adds: "Applications cannot be approved subject to meeting rural area requirements." Under 7 CFR 5001.105(c) the project must be located in a rural area, with two exceptions for cooperative and local foods projects. Check the address on the Rural Development Property Eligibility Map before you commission a feasibility study.
How much equity does USDA require for an existing business?
A minimum of 10 percent, measured one of three ways at the lender's closing of the guaranteed loan, which the Agency may raise under (d)(5)(i) or reduce under (d)(5)(ii). The first test in 7 CFR 5001.105(d)(1) is "A minimum of 10 percent balance sheet equity (including subordinated debt when subject to a standstill agreement for the life of the loan), or a maximum debt-to-balance sheet equity ratio of 9 to 1, at loan closing". The alternatives are a borrower investment of 10 percent or more of total eligible project costs ($400,000 on $4,000,000), or owner contributed capital of at least 10 percent of net total fixed assets plus depreciation.
An existing business has been "in operation for at least one full year and has achieved full operational capacity or stable operations". In every row, equity must be cash or earning assets contributed to the business and on its balance sheet, and is tested on a closing balance sheet that reflects the new debt.
The Agency may reduce it when personal or corporate guarantees are obtained and all pro forma statements show the business at or above the median quartile for the current, quick, debt-to-worth and debt service coverage ratios.
How much equity does a new business need for a B&I loan?
Under 7 CFR 5001.105(d): 10 percent with qualifying sales contracts, 25 percent on either route if the project involves construction and the lender will request the loan note guarantee before completion, and otherwise 20 percent balance sheet equity or 25 percent of total eligible project cost. Table 1 to that paragraph summarizes it:
| Borrower | Balance sheet equity (or ratio) | Share of total eligible project cost | Owner capital as share of fixed assets |
|---|---|---|---|
| Existing business, (d)(1) | 10 percent (or 9 to 1) | 10 percent | 10 percent |
| New, with qualifying sales contracts, (d)(2) | 10 percent (or 9 to 1) | 10 percent | N/A |
| New, construction, guarantee requested before completion, (d)(3) | 25 percent (or 3 to 1) | 25 percent | N/A |
| All other new businesses, (d)(4) | 20 percent (or 4 to 1) | 25 percent | N/A |
Row (d)(2) needs sales contracts with proceeds adequate to meet debt service and a term at least equal to the loan's, and the Agency must accept the counterparty's creditworthiness.
Worked example: $4,000,000 of total eligible project cost and a $4,000,000 closing balance sheet. Row (d)(3) needs $1,000,000 on either route: 25 percent of $4,000,000, or $1,000,000 of equity against $3,000,000 of debt at 3 to 1. Row (d)(4) needs $800,000 on the balance sheet route ($800,000 against $3,200,000 at 4 to 1) but still $1,000,000 on the project cost route.
A new business includes "a new enterprise or new affiliate of an existing business moving or expanding into a new location involving new market or labor areas". Under (d)(5)(i) the Agency may raise any row for a loan it determines carries a higher risk, weighing among other things "the strength of the feasibility study and experience of management". For the SBA side, see our SBA equity injection requirements guide.
When does a USDA B&I loan require a feasibility study?
When the loan is greater than $1,000,000.00 and the borrower is a new business. 7 CFR 5001.306(a)(3)(i):
For guaranteed loans greater than $1,000,000.00 to a new business, a feasibility study prepared by an independent qualified consultant acceptable to the Agency is required.
The test is the whole loan, not the 85 or 80 percent guaranteed share: in 7 CFR 5001.3 a guaranteed loan is the loan the lender makes and services. Under 5001.306(a)(3) the Agency may also require a study when the lender's analysis or other information is not sufficient to determine feasibility or, at $1,000,000.00 or less, when the project will significantly affect an existing business's operations and historic cash flow ((a)(3)(ii)). Cooperative stock purchase program loans have their own rule, 5001.140(a)(7).
7 CFR 5001.3 says a qualified consultant "means an independent third-party person possessing the knowledge, expertise, and experience to perform the specific task required", so on our reading not the borrower, and whether one is acceptable is the Agency's decision. For the appendix A contents and the SBA side, see our SBA and USDA feasibility study requirements page and feasibility study services.
What are the USDA B&I guarantee percentage and fees?
For standard-fee B&I loans obligated in fiscal year 2026, which ended on 30 September 2026: 85 percent of a loan under $5 million and 80 percent of a loan of $5 million to $25 million, with a 3.0 percent guarantee fee and a 0.55 percent retention fee. No fiscal year 2027 rates had been published on 10 October 2026. The source is the OneRD notice for fiscal year 2026 (91 FR 11272, 9 March 2026, effective 1 October 2025): "Unless precluded by a subsequent FY 2026 appropriation, these rates will apply to all guaranteed loans obligated in FY 2026." We found no later FY2026 notice. FY2024 and FY2025 had a single standard row at 80 percent.
| FY2026 notice row | Guarantee fee | Retention fee | Guarantee percentage |
|---|---|---|---|
| "B&I less than $5M" | 3.0 percent | 0.55 percent | 85 percent |
| "B&I $5M to $25M" | 3.0 percent | 0.55 percent | 80 percent |
| "B&I Reduced Fee" | 1.0 percent | 0.50 percent | 80 percent |
| High cost, isolated rural Alaska project not connected to a road system | 1.0 percent | 0.50 percent | 90 percent |
Three ceilings are in print for the one-time fee: 2 percent of the guaranteed principal in 7 U.S.C. 1932(g)(5); 5 percent in Table 1 to 7 CFR 5001.454(b); and 3 percent, notwithstanding the statute, in section 717 of Division B of Public Law 119-37, the fiscal year 2026 agriculture appropriations act.
The lender may pass the guarantee fee on to the borrower (5001.454). The notice has the retention fee paid yearly on the guaranteed share of the principal outstanding on 31 December. A further 0.50 percent applies if the loan note guarantee is issued before construction is complete (5001.454(c)).
Worked example. A $3,000,000 standard-fee loan obligated in fiscal year 2026, full balance outstanding on 31 December: guaranteed portion $3,000,000 x 0.85 = $2,550,000; guarantee fee $2,550,000 x 0.03 = $76,500; first retention fee $2,550,000 x 0.0055 = $14,025.
Fiscal year 2027. The guarantee fee rate is the one set "for the fiscal year in which a guaranteed loan is obligated" (5001.454), so a loan obligated on or after 1 October 2026 takes a fiscal year 2027 rate not yet published. A loan already obligated keeps its guarantee fee rate (5001.454(b)) and its retention fee (5001.455(b)).
What is the maximum USDA B&I loan?
$25 million per borrower, counting the guaranteed and unguaranteed portions of every B&I guaranteed loan the borrower has (7 CFR 5001.406(c)); 7 U.S.C. 1932(a)(4) sets the same figure per loan. The Secretary may approve up to $40 million for certain rural cooperatives. The term is limited to the justified useful life of the project or collateral, and to 40 years or the State limit if less (5001.402(a)); balloon maturities are not allowed "unless required as a loan servicing action" (5001.402(b)(2)).
Who can borrow under the B&I program?
Under 7 CFR 5001.126(d), a legal entity (for profit or nonprofit), an Indian Tribe, a Public Body or an individual. An individual must be a United States citizen, a permanent resident holding a green card, or a citizen or resident of the Pacific jurisdictions in (d)(3)(iii), and approval cannot be made subject to meeting that test. In the part 5001 text we read, no citizenship test is stated for the owners of an entity borrower; confirm with your lender and counsel. Under (d)(4) a borrower must show that loan funds will remain in the United States and that the project will primarily create or save jobs for rural US residents.
Unsecured guarantees are required from any person or entity owning 20 percent or more of the borrower, each for at least the owner's percentage interest times the loan amount, unless the lender obtains an exception under 5001.204(c). The section does not apply to passive investors.
What your business plan and feasibility study have to show
For a loan of more than $600,000, 7 CFR 5001.306(a)(2) requires "A pro forma balance sheet projected for loan closing". The lender must then certify that, as of closing, its credit analysis indicated sufficient capital or equity, and attach the closing balance sheet (5001.105(d)(6)).
So the plan and model we write for a B&I application show whether, and by which route, your closing balance sheet meets the row that applies; the equity itself is the cash or assets you contribute. A feasibility study is an independent opinion that can conclude against the project, and its strength is one of the factors the Agency weighs under (d)(5)(i).
Feasibility studies are $3,900 Essential, $6,500 Standard and $9,800 Premium, with complex projects from $14,000; our pricing page places USDA B&I studies in the Premium tier. Financial models are $750, $1,250 and $1,950. All fees are fixed and listed on our pricing page, and we never charge a percentage of anything you borrow, invest or raise.
Business Plan Firm is the US practice of Avvale, a London consultancy. We have written 1,000+ plans for 500+ founders across 30+ countries, and our clients have raised $500M+.
How we verified this
Every quotation was checked character for character against the source text on 10 October 2026.
- 7 CFR part 5001 (5001.1, 5001.3, 5001.105, 5001.126, 5001.140, 5001.204, 5001.306, 5001.402, 5001.406, 5001.454, 5001.455): the 2025 annual edition at govinfo.gov, compared with the current text at the Legal Information Institute. Two amendments (10 July and 11 December 2025) and one confirmation (12 December 2025) postdate that edition; none changes a paragraph relied on here, and we found no later one.
- 7 CFR 4279.101 and 4279.131, the superseded subpart, compared with the current text in the same way.
- 7 U.S.C. 1932 and 1991: loan cap, 2 percent fee ceiling and rural area definition, at the Legal Information Institute.
- Public Law 119-37, Division B, section 717: the 3 percent fee ceiling, at govinfo.gov.
- OneRD Annual Notice for Fiscal Year 2026, 91 FR 11272, FR Doc. 2026-04581, at the Federal Register, with the FY2025 and FY2024 notices.
Not verified, so not on this page: any fiscal year 2027 rate; anything on rd.usda.gov, which refused retrieval; the appendix A contents of a feasibility study; interest rates, processing times and approval rates.
Frequently asked questions
What are the USDA B&I loan equity requirements?
Under 7 CFR 5001.105(d), an existing business meets one of three 10 percent tests. A new business needs 10 percent with qualifying sales contracts, 25 percent if the guarantee is requested before construction is complete, and otherwise 20 percent balance sheet equity or 25 percent of project cost.
Does USDA still require 10 percent tangible balance sheet equity?
Not for a regular B&I loan. The tangible wording is 7 CFR 4279.131, and 7 CFR 4279.101 says that subpart is no longer used to process B&I loans other than CARES Act loans. The operative rule, 7 CFR 5001.105(d), drops the word tangible.
What percentage did USDA guarantee on B&I loans in fiscal year 2026?
For standard-fee B&I loans obligated in fiscal year 2026, which ended on 30 September 2026, the OneRD notice set 85 percent under $5 million and 80 percent from $5 million to $25 million. No fiscal year 2027 rates had been published on 10 October 2026.
Does a USDA B&I loan require a feasibility study?
Yes when the loan is greater than $1,000,000.00 and the borrower is a new business: 7 CFR 5001.306(a)(3)(i) requires a study by an independent qualified consultant acceptable to the Agency. Section 5001.306(a)(3) also says when the Agency may require one.
Can a non-citizen get a USDA B&I loan?
Under 7 CFR 5001.126(d)(3) an individual borrower must be a United States citizen, a permanent resident holding a green card, or a citizen or resident of the listed Pacific jurisdictions. In the part 5001 text we read, no citizenship test is stated for the owners of an entity borrower.
This page summarizes 7 CFR part 5001, 7 CFR 4279.101 and 4279.131, 7 U.S.C. 1932 and 1991, Public Law 119-37 and the OneRD fee notices as retrieved on 10 October 2026. It is general information, not legal, lending or immigration advice. Fees and guarantee percentages are set by fiscal year, and the Agency may raise equity requirements or, for an existing business, reduce them. Confirm current requirements with your lender and your USDA Rural Development State Office before acting.