Navigating USDA REAP and B&I Loans – A Guide

Category	B&I	REAP
Area	Must operate in rural areas (>50,000 or fewer pop.) Exception: Borrower’s HQ can be based in larger city. Project must be in eligible rural area.	Must operate in rural areas (>50,000 or fewer pop.) Exception: Agricultural producers do not have a rural population limit.
Borrowers	Cooperatives, For-Profit Entities, Federal Tribes, Non-profits, Public Bodies	Agricultural producers and small businesses (as defined by the federal code), including the following: Cooperatives, Electrical Utilities, Private for-profit entities, and Federal Tribes
Equity	Variable 10-20% project or balance sheet equity depending on business type	Loan guarantees on loans up to 75% of total eligible project costs. Grants for up to 50%of total eligible project costs. Combined grant and loan guarantee funding up to 75% of total eligible project costs.
Fees	3% of guaranteed amount .55% of outstanding principal balance per year	1% of guaranteed amount, .25% percent of outstanding principal balance per year
Personal/Corporate Guarantees	Guarantee for all owners with more than 20% stake	Guarantee for all owners with more than 20% stake
Max USDA Guaranty	80%	Can cover up to 75% of total eligible project costs with an 80% guarantee

Category	B&I	REAP
Primary Focus	General business purposes	Renewable energy projects and energy efficiency improvements
Eligible Projects	Business Expansion Debt Refinancing Equipment Real Estate Working Capital	Energy efficiency improvements Renewable energy systems
Restrictions	Certain ineligible loan purposes, such as churches or church-controlled organizations, gambling, golf courses or golf course infrastructure, and lines of credit	Projects must involve RES or EEI
Examples of Projects	Building a new facility Purchasing new manufacturing equipment Acquiring another business Standalone battery storage projects	Anaerobic digesters that convert livestock manure into biogas for pipeline quality gas or electricity Solar farms in rural areas
Additional Requirements	Loans must be backed by sufficient collateral Business must demonstrate ability to repay Environmental assessments might be required	Projects must be technically feasible and commercially viable Environmental assessments might be required

Category	B&I	REAP
Application Components	Description of business, business plan with financial projects, project scope, and details of loan request	Description of business, business plan with financial projects, project scope, and details of loan request
Financial Requirements	Good credit history Financial statements and projections	Creditworthiness Financial statements, including balance sheet, income statement, and cash flow
Application Submission	Must be submitted through approved lenders	Must be submitted through approved lenders
Approval Process	Reviewed by USDA staff in conjunction with approved lenders*	Reviewed by USDA staff in conjunction with approved lenders*
Processing Time	Approx. 60-90 days Environmental assessments and audits may be required, adding time to processing.	Approx. 60-90 days Environmental assessments and audits may be required, adding time to processing.

Understanding USDA Business & Industry Loans