USDA Loans: What are They? How Do They Work?

  • November 12, 2020
  • Written by : Elizabeth Beall

USDA stands for the United States Department of Agriculture. According to the USDA website, this department is responsible for “providing food, agriculture, natural resources, rural development, nutrition, and related issues based on public policy, the best available science, and effective management.”

In regards to loans, we explain the USDA Business & Industry Loan Guarantee program as a “special program that provides credit backed by the United States Department of Agriculture to rural businesses.”

Both lenders and the Department share a mutual goal of economic opportunity. Where the two set goals and a clear direction headed toward financial success.

Now, if you’ve made it this far, you probably already know what the USDA is all about because you own or operate a business in this industry… The next step is deciding on how to expand this business, which comes from an equal understanding of yes, the USDA and it’s purpose, and the loan side of things.

Before applying or accepting this type of loan, you should be cognizant of how USDA loans work, the benefits of this loan, why you might consider it, and where you can acquire it.

How does the loan work?

Prior to acquiring the loan, as with most, the business owner will complete an application, review financial history, and form a plan to explain how new funds will be allocated and used. 

Loan Qualification:

The more qualifications you meet, the clearer the direction of your loan allocation. Also, the better your financial history, the higher chance you will be accepted. Most of the time businesses in agriculture have collateral. This can be used as security, which only helps your chance of acceptance. 

Once accepted, as we mentioned. The United States Department of Agriculture backs the credit. We will provide you with affordable and longer monthly payments and lower interest rates.

What are the benefits of using this kind of loan?

While this loan option may not provide immediate funding, although we do our best to make the process as quick and simple as possible, there are many other benefits seen: namely affordable monthly payments, longer payment terms, and lower interest rates, making them perfect for a wide range of businesses.

Who might want this loan?

If you’re currently in this industry, this is definitely the loan for you. One of the upsides business owners see with this type of loan is the amount of understanding from the lender side, and the customization from the Department side, that goes into this loan process. One can use most loans universally. Whereas USDA loans were created with you in mind. 

For example, this type of loan can be used for a variety of reasons: business expansion, purchase of equipment, purchase of land, buildings or facilities, and debt refinancing.

The only potential limitation when considering this loan is that the “program is only available to businesses in rural areas. Meaning that they are located in a city with a population of under 50,000 people,” as we explain on our site to all business owners. 

Where can you acquire this loan and what does one require to do so?

We offer this loan here at REIL Capital and make acquiring your loan very simple. With a 3-minute online application, a few documents, and the following qualifications. We keep the process to a minimum: as fast as possible, easy and understandable, and transparent.

You can qualify if: 

  • You have at least $100,000 in annual revenue,
  • you’ve been in business at least 3 years,
  • your credit score is at least 680,
  • your business score is at least 145,
  • and you have no bankruptcies, outstanding liens, and no outstanding judgments. 

The USDA may request additional information from you. But don’t worry, we’ll walk you through it. Also,  we will ensure this is a very simple task in which only absolutely necessary documents will be requested. 

If you’re contemplating whether or not this is the right loan for you and your business. Please don’t hesitate to reach out. We don’t just broker the loan; we work with you, guide you, and help you, too.

On the other hand, if you’re ready for funding now, we’re ready too!

Talk with us soon? 

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