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How USDA Business Loans Have Become the Better Option

There is quite a confusion for online lenders nowadays. They often say that it is fast and easy to get loan approval and then obtain capital within a day.

By exploiting the 24/7 operation of the internet, digital lending’s convenience has many people clamoring for quick business loans as such.

But the platform itself is problematic. Rife with inconsistencies, high-interest rates, and fly-by-night operators, the risks often stack higher than the speed of getting only so much for your financing. That does not improve a bit if you are somewhere in rural America.

Meanwhile, that goes in favor of USDA business loans as your go-to option for getting funding for your business. It may not be as hassle-free as getting an online loan, but securing your capital from the United States Department of Agriculture (USDA) assures you of the stability and security of your source of funding.

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Easy Capital Access for Rural Businesses

Saying “easy” does not mean it is competitive with the sheer convenience of digital lending. But what is right is that the USDA is providing the agricultural sector and rural businesses unprecedented access to capital.

It has usually been the case that a farmer or a firm operating in a rural area would find it tougher to get a loan. It does not help that these rural communities also often get the brunt of economic recessions.

With those challenges in view, the USDA Rural Development came up with the Business and Industry (B&I) Guaranteed Loan Program. The program aims to provide affordable long-term funding to businesses located in rural America.

Thus, your business could qualify for USDA business loans if its location is within a city or town with less than 50,000 people. You can go online to the Eligibility Map to verify if your business address is within a rural area.

To come through with the USDA’s commitment to capital accessibility, it partnered with banks and credit unions as the lending arm of the program. Moreover, the USDA’s 470 strategically-located state and field offices assist potential borrowers in exploring options and identifying their specific needs.

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Easy Access to Larger Loans

Unlike the SBA’s 7a Loan Program, you can sign up for large loan amounts. Digital lending platforms typically max out at around $50,000. From the 7a Loan Program, you could get as high as $5 million, and that is decent enough for a business loan for some.

However, rural business capital needs can exceed $10 million. But that is no longer a problem with the greater access provided by the USDA business loans to higher possible amounts. And if your business is up for $25 million, which is the maximum loan amount—with the Administer’s exception, of course—then the B&I Guaranteed Loan is your best choice.

Easy Eligibility for Rural Businesses

In addition to improving the rural communities’ proximity to lending partners, the program also imposes a few restrictions on the kind of business that qualifies for USDA business loans. The USDA gives a rather general list that includes cooperatives, for-profit companies, nonprofits, individuals, federally-recognized tribes, and public bodies.

If the type of your business belongs to any of those mentioned, you must likewise ensure that you are a US citizen or have acquired permanent residency status. Also, your business could qualify if you own 51% or more of the company.

Easy Terms and Rates

With the situation of the rural enterprise in mind, the USDA business loan interest rates typically follow the 7a Loan Program of the SBA. Nevertheless, while the lender determines the interest rate for you, you can negotiate for loan terms that best suit your business.

You have to take in mind, though, that the USDA business loans have maximum term lengths. Again, the lender will discuss with you the applicable loan terms, which will depend on the purpose of the loan.

A business does not have to be in a mega area or a city to succeed and grow. Based on the USDA’s rural development mission, you do not even have to be in a place with a population of more than 50,000. While those factors undoubtedly contribute to profit-making, the opportunity for financing and support is equally available wherever you are in rural America.

Ultimately, it is a very rural community’s economic opportunity to take advantage of the USDA business loans. Specifically tailored to meet the unique needs of businesses and enterprises found in almost 97% of the US landmass, the USDA aims to promote these business loans to fuel the economic potential of rural America.

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