The USDA helps create jobs and stimulates rural economies by providing financial backing for rural businesses and properties. Its primary purpose is to create and maintain employment and improve the economic climate in rural communities. USDA Loan proceeds may be used for working capital, machinery and equipment, real estate, and certain types of debt refinancing. This is achieved by expanding the lending capability of private lenders in rural areas and helping them service quality loans that provide lasting community benefits. This program represents a true private-public partnership.
Loan Features
Term Length and Amortization: USDA term length and amortization depends on the product as well as the underwriting guidelines of the conventional partner. Terms and amortizations can go up to 40 years in some limited circumstances, but are typically between 5 and 30 years.
Recourse: USDA Loans are almost always recourse, which means that a personal guaranty for the repayment of the loan is required. Full recourse loans make the sponsors guarantying the loan responsible for any and all shortfalls between the loan balance and sales price in the event of default and foreclosure as well as any applicable legal and ancillary fees.
Prepayment Penalty: Prepayment structures can vary greatly, depending on the how the conventional partner structures the loan and what USDA program is guarantying the loan.
Lending Areas: USDA guaranties are only available in rural areas (Less than 50,000 population).
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