A USDA Business and Industry (B&I) loan is a private lender's loan that USDA Rural Development partly guarantees, and it is one of the few federal credit programs written specifically for rural businesses. As of October 30, 2026, it is not tied to Opportunity Zone status, but its rural test is close to the one OZ 2.0 uses for its rural benefits, so rural OZ projects often check both.
- Borrower cap
- $25 million
- Maximum guarantee
- 90% (set yearly)
- Longest term
- 40 years
Why rural status matters twice
For Opportunity Zones, rural status now changes the tax result. Since July 4, 2025, property in a zone made up entirely of rural area is substantially improved at 50 percent of basis instead of 100 percent. For amounts invested after December 31, 2026, a Qualified Rural Opportunity Fund (one holding at least 90 percent of its assets in rural-zone property) gets a 30 percent basis step-up at 5 years instead of 10 percent. Treasury and the IRS identified 3,309 of the 2018 zones as entirely rural, and Rev. Proc. 2026-14 lists 8,334 entirely rural tracts among the 25,332 eligible for the new round. See rural Opportunity Zones.
For USDA, rural status decides whether the project can get a B&I guarantee at all.
The two rural definitions
| Opportunity Zones (IRC 1400Z-2(b)(2)(C)(ii)) | USDA programs in 7 CFR 5001.3 | |
|---|---|---|
| Core test | Any area other than a city or town of more than 50,000 people and the urbanized area contiguous and adjacent to it | Any area not in a city or town of more than 50,000 inhabitants and not in the urbanized area contiguous and adjacent to it |
| Extra exclusions | None; the IRS says it matches the USDA definition but without that Act's extra provisions (Notice 2025-50) | Excludes certain populations under 7 U.S.C. 1991(a)(13)(H) |
| Unit applied | Census tracts (a zone "made up entirely of rural area") | The project location, using USDA's eligibility map |
| Data | 2020 census for 2018 zones (Notice 2025-50) | The latest decennial census |
Because the units differ, a site can be in a rural OZ and still need its USDA eligibility confirmed, or the reverse. USDA's regulation states that applications "cannot be approved subject to meeting rural area requirements," so confirm eligibility first.
B&I rules that matter for OZ projects
All rules below are from 7 CFR part 5001, read in the eCFR on October 30, 2026.
- Purpose. The project must improve, develop or finance business, industry and employment and improve the economic and environmental climate in rural communities (5001.105(a)).
- Eligible uses. They include buying and developing land, buildings or infrastructure for commercial or industrial property; business acquisitions, start-ups and expansions that create or save jobs; machinery and equipment; and permanent working capital (5001.105(b)).
- Loan size. Total B&I guaranteed loans to one borrower are capped at $25 million, with up to $40 million possible for certain value-added agricultural cooperatives (5001.406(c)).
- Guarantee. Maximum 90 percent of eligible loss; the actual percentage is set each fiscal year in the Federal Register (5001.407).
- Term. No longer than the justified useful life of the project or collateral, capped at 40 years; no balloon payments; the first full principal and interest payment within 3 years of the note (5001.402).
- Guarantee fee. A one-time fee paid by the lender, which the lender may pass to the borrower, at a rate set yearly; the B&I maximum is 5 percent (5001.454).
- Borrowers. For-profit or nonprofit entities, Tribes, public bodies and individuals who meet citizenship rules, engaged in a business; collateral must be fixed assets that stay in the United States (5001.126(d)).
Fund ownership and B&I
The B&I borrower must own and control the facility, but the regulation allows "various types of ownership structures" that bring in passive investor equity (5001.126(a)(1)). The regulation's examples are partnership flips and inverted leases; it does not mention Opportunity Zone funds, so whether a fund-owned structure fits is a question for the lender and USDA. Businesses that depend on each other for repayment generally must be co-borrowers (5001.126(a)(2)).
The B&I guarantee is debt. It does not add to any investor's qualifying OZ investment; only the investor's cash investment of eligible gain gets the deferral and exclusion (IRC 1400Z-2(e)(1)). The B&I regulation separately addresses combining a guarantee with the New Markets Tax Credit (5001.141); see NMTC and Opportunity Zones.
What the lender and USDA evaluate
The lender performs the credit evaluation under 5001.202 and applies for the guarantee. Expect to show the business's financial statements and projections, the jobs created or saved, collateral and appraisals, the sponsor's equity, and the rural eligibility determination. For an OZ project, add the 50 percent improvement schedule if an existing building is involved.
Janover Capital LLC arranges commercial loans; it is not a lender, a fund sponsor or a broker-dealer. Send rural project details through the financing form or to desk@janover.co. The desk usually responds within one business day.
Common questions
What is a USDA B&I loan?
It is a loan made by a private lender and partly guaranteed by USDA Rural Development under 7 CFR part 5001. It finances businesses that create or save jobs and improve the economic climate in rural areas. USDA does not make the loan; it guarantees part of it.
How large can a USDA B&I loan be?
The regulation caps total B&I guaranteed loans to one borrower at $25 million, including guaranteed and unguaranteed portions and existing B&I loans. The Secretary may approve up to $40 million for certain rural cooperatives that process value-added agricultural commodities (7 CFR 5001.406(c)).
Is a rural Opportunity Zone automatically eligible for USDA?
Not automatically. The two definitions are similar, since both exclude cities and towns over 50,000 people and the urbanized area next to them, but USDA applies its own statutory exclusions and its own eligibility map. Check the project address in USDA's map and the tract in the OZ lists separately.
Can a USDA B&I loan finance apartments in an Opportunity Zone?
Generally no. 7 CFR 5001.118(a) makes apartments, duplexes and other residential housing whose primary purpose is independent housing ineligible for B&I, with narrow exceptions such as certain tourist lodging and housing development sites.
What percentage does USDA guarantee?
The regulation sets a maximum guarantee of 90 percent and says the agency sets the actual percentage each fiscal year by Federal Register notice (7 CFR 5001.407). Check the current-year notice for the percentage that applies.