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Farm Loan - Commercial Farm Land Loan Lender - Texas - Arizona -
Nevada - California - Oregon |
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1. USDA
Rural Development guarantees loans made
by commercial banks and non-bank lenders
to any United States business or person.
2. The Business and Industry (B&I)
program is lender-driven --- the lender
requests the guarantee, and, if
approved, closes, and services the loan
usually for the life of the loan..
3. Standard guarantee is 80% on loans up
to $5 million, 70% for loans from $5 to
$10 million, and 60% for loans up to $25
million.
4. The government guaranteed portion of
the loan does not count toward the
bank’s legal lending limit, and the
lender may sell the guaranteed portion
of the loan in the secondary market to
generate fee income.
5. The bank guaranteed loans help lenders
satisfy Community Reinvestment Act (CRA)
requirements.
6. The exact interest rate will be
determined (keep in mind they are always
negotiated), they can be either fixed or
variable, but the rate may not be
adjusted more than quarterly.
7. The repayment terms for loans on real
estate will not exceed 30 years, 15
years, or the useful life, for machinery
and equipment, and 7 years for working
capital, purposes.
8. Loans with balloon payments are not
permitted.
9. An existing business must have a
tangible Balance Sheet equity position
of 10% or more, and 20% or more for a
new business.
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