Entrepreneurs and business owners who have been turned down for conventional or SBA financing have another option:
Because we’re lucky enough to live in what the federal government calls a rural or underdeveloped area, it offers USDA commercial loans for areas like North Idaho.
USDA commercial loans can finance commercial ventures in areas with populations under 50,000 inhabitants. That means that Coeur d'Alene, with a 2010 census population of 44,137 has a low enough density that USDA will insure qualified loans, freeing up financing options for entrepreneurs, according to Kim Cooper, spokesman for the Coeur d’Alene Association of Realtors.
The USDA Business and Industry Loan program – it’s loans are often called B&I Loans – is designed to create and save rural jobs, and improve the economic and environmental climate of rural communities.
Applicants must qualify and the funding isn't 100 percent, but there is no minimum loan amount so even small operations that need minimal cash may apply. Fees must be negotiated with the lender because USDA does not actually loan the money – they just insure the bank that the money will be repaid.
With a B&I loan you can obtain working capital - not lines of credit - over a seven-year term. Expand or buy equipment and pay the loan back over 15 years, or finance real estate for a 30-year term. This is great news since many commercial loans only amortize over a maximum of 20 years, Cooper said.
A version of this article appeared in the CDA Press