-  About RD                  -  Key Priorities 
              -  History 
              -  Farm Bill 
              -  Grant Awards 
              -  Careers at Rural Development 
              -  Rural Data Gateway 
              -  Leadership 
              -  Agencies                    -   Rural Business-Cooperative Service 
                -   Rural Housing Service 
                -   Rural Utilities Service 
              -  Offices                    -  Business Center 
                -  Civil Rights                       -  Civil Rights Contacts 
                  -  Equal Employment Opportunity Branch 
                  -  Program Compliant Processing and Resolution Branch 
                  -  Program Compliance and Training Branch 
                  -  Posters 
                  -  Civil Rights Training 
                  -  Limited English Proficiency 
                  -  Civil Rights Library 
                  -  Accessibility Statement 
                -  External Affairs 
                -  Innovation Center                      -  Innovation Center Divisions 
                -  Risk Office 
                -  State Offices 
                -  Servicing Office 
              -  Initiatives 
              -  Tribal Relations 
            -  State Offices 
            -  Programs & Services                  -  Programs                    -  BioPreferred Program 
                -  Business Programs 
                -  Community Facilities Programs 
                -  Electric Programs 
                -  Energy Programs 
                -  Inflation Reduction Act Programs 
                -  Multifamily Housing Programs 
                -  Single Family Housing Programs                      -  Homeowner Assistance Fund FAQs 
                -  Telecommunications Programs                      -  Telecom Maps 
                -  Water & Environmental Programs 
              -  Services                    -  For Engineers 
                -  For Water & Environmental Engineers 
                -  RUS Interest Rates 
                -  RD Apply 
                -  Rural Development Disaster Assistance 
                -  RUS Program Borrowers 
                -  Cooperative Services 
            -  Newsroom                  -  News Releases 
              -  Stakeholder Announcements 
              -  Tribal Outreach 
              -  Success Stories 
              -  Federal Funding Opportunities 
              -  Blog 
              -  Radio 
              -  Archived News Releases 
            -  Resources                  -  Acronyms 
              -  Directives                    -  Administrative Notices 
                -  Electric Sample Documents 
                -  Form Letters 
                -  Guide Letters 
                -  Handbooks 
                -  Informational Publications 
                -  Instructions 
                -  Procedures Notices 
                -  Unnumbered Letters 
              -  Disaster Assistance                    -  We Care Letters 
              -  Environmental Studies                    -  Assessments 
                -  FPEP Environmental Review Comment Submissions 
                -  Impact Statements 
                -  Environmental Guidance 
              -  Forms                    -  E-Forms 
                -  Departmental Forms 
                -  RUS Forms 
              -  Publications                    -  Brochures 
                -  Fact Sheets 
                -  Reports 
                -  Resource Guides 
                -  Publications for Cooperatives 
              -  Regulations and Guidance                    -  Federal Register Publications 
                -  Program Regulations 
                -  Guidance Documents 
                -  Bulletins 
              -  Rural Data Gateway 
              -  LINC Training Library 
              -  Lender List 
              -  RBCS How-To Apply Video Series for Applicants 
            -  Contact Us                  -  National Office 
              -  State Offices 
              -  Area Offices 
              -  Loan Servicing 
              -  Press Office 
              -  Field Accountants 
              -  Electric GFR 
              -  ReConnect GFRs 
              -  Telecom GFR 
              -  State Energy Coordinators 
              -  Civil Rights Contacts 
              -  Freedom of Information Act                    -  FOIA Reading Room 

                  - English
                  - Spanish

# Business and Industry CARES Act Program

**Fact Sheet

Federal Register Notice

##             Overview          

## 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          

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

                                  - Guaranteed Loan Making - B&I General  (pdf)
                                  - Guaranteed Loan Making - B&I Loans  (pdf)
                                  - Servicing B&I Guaranteed Loans  (pdf)

### Forms

NOTE: Adobe Acrobat 8 or higher is required to access the following forms:
                                  - AD-3030 Felony Conviction and Tax Delinquent Status for Corporate Applicants  (pdf)
                                  - RD4279-1 Application for Loan Guarantee  (pdf)
                                  - RD4279-2 Certification of Non-Relocation and Market and Capacity Information Report  (pdf)
                                  - RD4279-4 Lender’s Agreement  (pdf)
                                  - RD 4279-14 Unconditional Guarantee  (pdf)
                                  - RD1980-41 Guaranteed Loan Status Report  (pdf)
                                  - RD1980-44 Guaranteed Loan Borrower Default Status  (pdf)

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.

##             Other Requirements          

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).

##             Contact          

Contact a local  Rural Development office.

##             Events          

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

**Past Webinars:**
                                  - June 3 |  Webinar Transcript
                                  - May 27, 2020 |  Webinar Transcript