Does Your Business Qualify for a Business & Industry Loan?
To qualify for a Business & Industry (B & I) loan, here are the guidelines set by the Rural Business Cooperative Service (RBCS) to determine whether your business is considered an eligible small business.
Rural Area
Your loan request must be in a rural area with a population of 50,000 or less.
Impact On Local Jobs
RBCS begins determining eligibility for a B & I loan based on your loan request’s impact on jobs in the rural community. RBCS priorities are, in order from highest to lowest, as follows:
- Saving existing
jobs
- Expanding existing
businesses
- New plant location
or new business start-up
- Business which
will generate little or no
permanent employment other than
the entrepreneur
Quality of Loan
RBCS looks for quality loans that will support a stable employment source. The
factors that RBCS reviews to determine loan quality include:
- Equity:
10%-25% down may be required at
the loan closing, depending upon
the risk factors presented by
your request
- Profitability:
Your application should show
historic cash flow adequate to
service the debt
- Management:
Management must demonstrate
experience in the industry and
competence in production,
marketing, finance and personnel
management
- Collateral:
Collateral must be sufficient to
secure the loan.
- Guarantees:
Personal guarantees from owners,
major stockholders and/or
partners are required
Use of Proceeds
Your B & I loan request will be considered ineligible if you intend to use proceeds to:
- relocate jobs or
expand a business where an excess
of supply of the goods or
services already exists
- pay any
distribution to an owner or
beneficiary who will continue in
the business
- transfer the
ownership of a business unless
the transfer is necessary to keep
the business from closing, or if
it will expand job opportunities
- pay off creditor
in excess of value of collateral
- assist government
employees and military personnel
owning 20% or more of the
business
- finance any
illegal business activity
- finance any line
of credit
- finance
agricultural production with the
exception of specialized crops
such as forestry, commercial
nurseries, aquaculture,
hydroponics, mushrooms or
commercial custom feed lots
Business Type
If your business falls within one of the following categories, it is ineligible for a B & I loan.
- Lending and
investment institution or
insurance company
- Charitable or
educational institution
- Church,
church-sponsored or fraternal
organization
- Community antenna
television service or facility
- Business
establishment when more than 10%
of annual gross revenue comes
from legalized gambling
activities, such as a racetrack
- Golf course
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Document last modified Wednesday, 27-Feb-2002 15:17:40 EST
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