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USDA Rural Development

Small business has big potential with USDA programs

The development of rural America is in constant motion, supported by a diverse scope of USDA Rural Development (RD) loan programs created for businesses. Eligibility for borrowers, locations and uses vary. Learn more or connect with one of our USDA loan experts. 

Our story began in rural Minnesota and we have proudly financed small business growth and revitalization in rural areas for decades. We start by building a strong relationship and get to work with creativity and a sense of urgency. 

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USDA Rural Development Loan from Stearns Bank

USDA Loan Programs

A variety of USDA programs are available to support the development and improvement of rural America. Stearns Bank can provide guidance, determine eligibility and facilitate these impactful, forward-looking loan options. 

The USDA Business & Industry (B&I) Program is designed to grow, develop, improve, or finance businesses, industry and employment in specific rural areas. It is also designed to improve the economic and environmental conditions of rural areas. 

Who may qualify for B&I loans? 

  • For-profit or non-profit businesses
  • Cooperatives
  • Federally-recognized Native American tribes
  • Public bodies
  • Individuals engaged in or proposing to engage in a business

Eligible uses include (but are not limited to): 

  • The purchase and development of land, buildings and associated infrastructure for commercial or industrial properties
  • Business conversion, enlargement, repair, modernization or development
  • The purchase and installation of machinery and equipment, supplies or inventory
  • Debt refinancing, when it improves cash flow and creates jobs
  • Acquisitions when the loan will maintain business operations and create or save jobs
Learn More

The Rural Energy for America Program (REAP) provides loan financing and grant funding to agricultural producers and rural small businesses in eligible locations for renewable energy systems or energy efficient enhancements. These changes are critical to increasing energy independence for the U.S. Over time, investments through the program can help lower the cost of energy for small businesses and agricultural producers. 

Eligible uses include (but are not limited to): 

  • The purchase, installation and construction of energy efficiency improvements 
  • Biomass, such as biodiesel and ethanol, anaerobic digesters, and solid fuels
  • Geothermal for electric generation or direct use
  • Hydropower below 30 megawatts
  • Hydrogen
  • Wind generation
  • Solar generation 
  • Ocean (tidal, current, thermal) generation

Key advantages include: 

  • Flexibility to secure larger loans amounts
  • Longer terms
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The Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program (Section 9003), also know as BAP, provides loans to assist in the development, construction and retrofitting of new and emerging technologies in eligible areas.

Eligible uses include: 

  • Commercial-scale biorefineries using eligible technology, including advanced biofuels and renewable chemicals
  • Biobased product manufacturing facilities that use technologically new commercial-scale processing and manufacturing equipment to convert renewable chemicals and other biobased outputs of biorefineries into end-user products on a commercial scale
  • Refinancing, in certain circumstances

Contact a USDA Loan Expert

The limited-time USDA Food Supply Chain Guaranteed Loan Program was implemented in September 2021 to strengthen America's food supply chain. This program differs from most USDA programs in that it does not include geographical restrictions within the U.S.

Key advantages include: 

  • No guarantee or renewal fees
  • Competitive interest rates
  • Longer repayment terms
  • Full amortization 
  • Higher loan amount options

Eligible uses, for food supply chain participants, include (but are not limited to): 

  • The purchase and development of land, buildings or infrastructure
  • Machinery or equipment
  • Startup costs
  • Working capital
  • Inventory and supplies 
Learn More

The Water & Waste Disposal loan and grant program provides funding for clean and reliable drinking water systems, sanitary sewage disposal, sanitary solid waste disposal, and storm water drainage in eligible areas

Eligible uses include (but are not limited to): 

  • Drinking water sourcing, treatment, storage and distribution
  • Sewer collection, transmission, treatment and disposal
  • Solid waste collection, disposal and closure
  • Storm water collection, transmission and disposal 

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A range of Community Facilities Programs exist to develop or improve essential public services and facility in rural communities across the U.S. Such development helps retain businesses that provide employment and services to residents. 

Eligible uses include (but are not limited to):

  • Fire and rescue stations
  • Village and town halls
  • Health care clinics
  • Hospitals
  • Adult and child care centers
  • Assisted living facilities
  • Rehab centers
  • Public buildings
  • Schools
  • Libraries
  • Land acquisition
  • Professional fees
  • Purchase of equipment 

Contact a USDA Loan Expert

Determining Eligibility

USDA Multi-State Lender for USDA rural development loans

USDA programs have varying eligibility standards. Geography and loan use make a difference in determining eligibility. Start your determination with the USDA Rural Development eligibility and mapping tool.

As a USDA Multi-State Lender, Stearns Bank can process your USDA loan directly with federal agencies, regardless of where you or your project are located. 

USDA Rural Development Loan eligibility map and tool
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Green Energy, Clean Energy

REAP financing for renewable power

Solar and wind power are on an exciting rise across the nation. Stearns Bank is committed to this clean energy direction and can help you determine the best type of loan for your project. 

See our blog: USDA REAP for Solar, Wind and Renewable Energy Financing

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USDA Renewable Energy for America Program
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Small Business Matters

5 FAQs about USDA B&I Loans

Explore 5 frequently asked questions about the USDA Business & Industry Loan Program (B&I), including requirements and restrictions.

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5 FAQs about USDA B&I Loans

The Stearns Bank Difference

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  • Check markPersonal service, collaborative approach
  • Check markCreative solutions, flexible process
  • Check markFull-service bank - deposits, cash management, equipment financing
  • Check markExperience in small business and rural communities
  • Check markFast decisions and prompt answers
Kelly-Skalicky

"With roots in rural Central Minnesota and a nationwide presence, Stearns Bank is committed to economic growth in rural communities throughout the U.S. Our designation as a USDA Multi-State Lender demonstrates our vast experience in USDA lending and delivers incredible efficiency and speed throughout the lending process."

Kelly Skalicky
Stearns Bank President and CEO

 

Frequently Asked Questions (FAQ)

What is the USDA OneRD program?

USDA OneRD is comprised of four lending programs, enabling businesses and entrepreneurs to work with private lenders, such as Stearns Bank N.A., to invest in rural businesses and grassroots rural economic development.

The four lending programs are:

What is considered “rural” for a USDA loan?

The USDA defines rural areas as “any area, other than a city or town that has a population of greater than 50,000 inhabitants, and the urbanized area contiguous and adjacent to such a city or town.”

Agricultural producers may be in rural or non-rural areas. See the USDA map for eligible business locations

 

What is the approval process for a USDA rural development loan?

Start by contacting a Stearns Bank lender so we can discuss your business objectives and walk you through the process. As a USDA Multi-State Lender, we have a direct channel to the federal agency. This ensures your loan will receive prompt consideration, with no delays at the state or local level.

The Stearns Bank lending team is experienced with government guaranteed loan programs. We will make sure your application meets all agency requirements. We will respond promptly to questions and work in your interest to ensure successful loan approval and funding within your timeline.

Are there borrowing restrictions for loan guarantees?

  • 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. and the facility being financed will primarily create new or save existing jobs for rural U.S. residents.

What is the REAP program?

The REAP program provides guaranteed loan financing and grant funding to agricultural producers and rural small businesses for renewable energy systems or to make energy efficiency improvements. Agricultural producers may also apply for new energy efficient equipment and new system loans for agricultural production and processing.

Who is eligible to apply for a REAP loan?

  • Agricultural producers with at least 50 percent of their gross income coming from agricultural operations.
  • Small businesses in eligible rural areas.

How can funds be used in the REAP program?

Funds may be used for renewable energy systems, such as:

  • Biomass (for example: biodiesel and ethanol, anaerobic digesters, and solid fuels)
  • Geothermal for electric generation or direct use
  • Hydropower below 30 megawatts
  • Hydrogen
  • Wind generation
  • Solar generation
  • Ocean (tidal, current, thermal) generation

Funds may also be used for the purchase, installation and construction of energy efficiency improvements, such as:

  • High efficiency heating, ventilation and air conditioning systems (HVAC)
  • Insulation
  • Lighting
  • Cooling or refrigeration units
  • Doors and windows
  • Electric, solar or gravity pumps for sprinkler pivots
  • Switching from a diesel to electric irrigation motor
  • Replacement of energy-inefficient equipment

Agricultural producers may also use guaranteed loan funds to install energy efficient equipment and systems for agricultural production or processing.

What is the Business & Industry loan program?

The Business & Industry loan program promotes rural economic development and job creation, by making investment capital available to rural businesses and other organizations.

Who may apply for a Business & Industry loan?

  • For-profit or non-profit businesses
  • Cooperatives
  • Federally-recognized Native American tribes
  • Public bodies
  • Individuals engaged or proposing to engage in a business

What is considered an eligible area for a Business & Industry Loan?

  • Rural areas not in a city or town with a population of more than 50,000 inhabitants.
  • 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 either rural or urban areas under the Local and Regional Food System Initiative.
  • Check eligible addresses for Business & Industry programs.

How can a Business & Industry loan be used?

Eligible uses for a Business & Industry loan include (but are not limited to):

  • Business conversion, enlargement, repair, modernization or development.
  • The purchase and development of land, buildings and associated infrastructure for commercial or industrial properties.
  • The purchase and installation of machinery and equipment, supplies or inventory.
  • Debt refinancing when such refinancing improves cash flow and creates jobs.
  • Business and industrial acquisitions when the loan will maintain business operations and create or save jobs.

What types of financing are NOT allowed with a Business & Industry loan?

  • Lines of credit.
  • Owner-occupied and rental housing.
  • Golf courses or golf course infrastructure.
  • Racetracks or gambling facilities.
  • Churches or church-controlled organizations.
  • Fraternal organizations.
  • Lending, investment and insurance companies.
  • Agricultural production, with certain exceptions.
  • Distribution or payment to a beneficiary of the borrower or an individual or entity that will retain an ownership interest in the borrower.

What are collateral requirements for a USDA Rural Development loan?

Collateral must have documented value sufficient to protect the interest of the lender and the Agency. Lenders will discount collateral consistent with sound loan-to-value policy with the discounted collateral value at least equal to the loan amount. The lender must provide satisfactory justification of the discounts being used. Hazard insurance is required on collateral (equal to the loan amount or depreciated replacement value, whichever is less).

How do I get started?

Contact Stearns Bank. We will discuss your project and review your business plan. Together we can determine the best type of financing for your situation and goals. If a USDA rural development loan is appropriate for financing your project, we will initiate the process.

As a USDA Multi-State Lender, we are familiar with USDA requirements and we have direct channel to the federal agency. This helps ensure an efficient review and approval process, with no delays or setbacks. Our personal service gives you confidence that each step of your loan approval process is handled with attention to detail.

Subject to credit approval/qualification.
Terms, conditions and closing costs may apply.
USDA policies may differ from Stearns Bank N.A.

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USDA Rural Development Finance Team

Get in touch with Tom Hosier
Tom Hosier
Chief Lending Officer
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Get in touch with David Feriancek
David Feriancek
SVP, National Lending
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Get in touch with Tom Ethen
Tom Ethen
VP, Commercial Lending
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Get in touch with Douglas D'Aigle
Douglas D'Aigle
Market President/Commercial Lender
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Get in touch with Lucas Pederson
Lucas Pederson
Consumer and Commercial Lender
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Get in touch with Kevin Kinahan
Kevin Kinahan
Commercial Lender
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Resources

5 FAQs about USDA B&I Loans

11/21/2022
Read More

Everything You Should Know About the USDA Rural Energy for America Program

08/24/2022
Read More

Cold Storage & The Food Supply Chain

06/15/2022
Read More

FSA Loans Expand Financing Options For Farmers & Ranchers

08/19/2021
Read More

USDA Lending Programs

Stearns Bank is recognized for our experience in government rural financing programs and will work effectively with all parties to manage the financing approval process on your timeline. The USDA is committed to growing investments in rural America through the OneRD Guarantee Loan Initiative.

Contact a USDA Loan Expert

Business & Industry

Financing for rural businesses in cities with a population of less than 50,000, including for-profit, nonprofits, co-ops, federally recognized tribes and public bodies.

Rural Energy America Program (REAP)

Provides financing to agricultural producers and rural small businesses to purchase or install renewable energy systems or make energy efficiency improvements.

Community Facilities

Provides financing to develop community facilities – those that provide essential services to the local community within a primarily rural area.

Water and Waste Disposal

Provides financing to improve access to clean, reliable water and waste disposal systems for households and businesses in rural areas.

Contact a USDA Loan Expert
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