USDA Data Center Feasibility Study

USDA's Business and Industry guaranteed loan can finance a rural data center that the borrower owns and controls, up to $25 million in total B&I debt per borrower. The feasibility study behind that loan has to prove three things: the borrower's control of the facility and its services, contracted demand, and DSCR under realistic power and lease-up assumptions. No paragraph of 7 CFR Part 5001 names data centers. Eligibility runs through the general purposes, and MMCG found no confirmed public record of a closed USDA data center financing. This page sets out the rules, the judgement calls, and what the study must contain under Appendix A to Subpart D.

MMCG prepares USDA feasibility studies to the five components and 37 factors of Appendix A. Engagements start at $4,900, fixed fee quoted at proposal stage, with standard delivery in 9 to 16 business days.

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B&I lenders and bank credit officers evaluating a data center request. Rural operators, cooperatives and developers weighing a USDA path against SBA or conventional debt. Sponsors of edge, enterprise and small colocation facilities in rural counties. For the full asset-class treatment, see Data Center Feasibility Study. For the program itself, see USDA Feasibility Study.

Every judgement call above should be raised with the USDA State Office in a preliminary eligibility review under 5001.302 before a full study is ordered.

The text below is current as of the eCFR edition of 1 October 2026. Subpart B was last amended on 11 December 2025 (90 FR 57351); that amendment revised the agricultural production paragraph and the REAP section and left the paragraphs below unchanged.

Eligible purposes, 5001.105(b). The list is non-exhaustive. The paragraphs that reach a data center are (b)(1), the purchase and development of land, buildings and infrastructure for commercial or industrial properties, including expansion and modernization; (b)(2), acquisitions, start-ups and expansions where jobs will be created or saved; (b)(3), machinery and equipment, which reaches switchgear, UPS, cooling and, subject to useful-life term limits, IT hardware; (b)(10), broadband and telecommunication systems not otherwise eligible for RUS financing, subject to the public notice and reporting rules in 7 CFR 1738.106(a) and 1738.107; and (b)(12), constructing or equipping facilities for lease to private businesses engaged in commercial or industrial operations. Separately, 5001.121 allows up to 10 percent of any guaranteed loan's project funds to go to broadband infrastructure under 7 CFR Part 1980, Subpart M.

Location, 5001.105(c). The project must be in a rural area. Where a project straddles the line, only the rural portion is guaranteed.

Ineligible projects, 5001.115. Paragraph (a) bars any investment or arbitrage and any speculative real estate investment. Paragraph (e) bars guarantees of lease payments. Paragraph (g) bars properties used for primarily commercial rental where the borrower has no control over tenants and the services offered, with an exception for industrial-site infrastructure. Paragraph (h) bars technology that is not commercially available.

Job transfer and headcount, 5001.118(b) and 5001.306(a)(1). Projects over $1 million are restricted if they would transfer jobs between areas or add more than 50 direct employees in a market lacking demand, and loans over $1 million adding more than 50 employees trigger a Department of Labor review. Few data centers reach that headcount.

Borrower control, 5001.126(a)(1). The borrower must own and retain control of the facility at all times. Third-party operation under a contract, management agreement or lease is allowed only where it is the customary or only feasible way to provide the facility, and only if the borrower keeps management control. Under 5001.126(a)(2), related entities that depend on each other for repayment, such as a property company and an operating company, must be co-borrowers unless USDA waives the requirement in writing.

Use of funds, 5001.122(h) and (n). Loan funds cannot pay rent for equipment the borrower owns, or lease payments.

Loan amount and term, 5001.406(c) and Subpart E. Total B&I debt to one borrower, guaranteed and unguaranteed, existing and new, is capped at $25 million. The only exception, up to $40 million, is for rural cooperatives in value-added agricultural processing. The term is limited to the justified useful life of the assets or collateral and never exceeds 40 years.

Source: OneRD Annual Notice of Guarantee Fee Rates, Periodic Retention Fee Rates, Loan Guarantee Percentage and Fee for Issuance of the Loan Note Guarantee Prior to Construction Completion for Fiscal Year 2026, 91 FR 11272, published 9 March 2026, applicable to loans obligated in FY2026. No FY2027 notice had appeared in the Federal Register as of 4 October 2026. Lenders should confirm the rate in force at obligation. Last verified 4 October 2026.

Under 5001.105(d), an existing business needs at least 10 percent balance-sheet equity or 10 percent of eligible project cost. A new business with sales contracts that cover debt service and run at least as long as the loan needs 10 percent. A new business taking a loan note guarantee before construction is complete needs 25 percent. All other new businesses need 20 percent balance-sheet equity or 25 percent of project cost. USDA may raise the requirement for higher-risk loans, including businesses producing new products for new and emerging markets, which is the paragraph most likely to be applied to an AI or HPC proposal.

A rural area under 5001.3 is any area not in a city or town with a population of more than 50,000 and not in the urbanized area contiguous and adjacent to such a city or town, measured on the latest decennial census, with limited rural-in-character exceptions.

The rules point in two directions and the outcome turns on control. Paragraph (b)(12) of 5001.105 expressly allows facilities built for lease to private businesses. Paragraph (g) of 5001.115 bars primarily commercial rental where the borrower has no control over tenants and services. A colocation operator that sells power, cooling, security, remote hands and cross-connects under service agreements is running a service business. A landlord collecting triple-net rent on a powered shell looks like passive rental. No Part 5001 text names data centers, and MMCG found no RD Instruction, Unnumbered Letter, State Office interpretation, National Appeals Division decision or OIG report that addresses data centers, hosting or colocation. Each verdict below is a labeled judgement call for the State Office.

Pre-leased against speculative. A speculative shell is ineligible outright under 5001.115(a). A shell fully leased to a creditworthy tenant for at least the loan term has a stronger argument under (b)(12). It may also qualify for the 10 percent new-business equity tier, since 5001.105(d)(2) applies where contracts cover debt service for the loan term and USDA accepts the counterparty's credit. Treating a lease as a sales contract for that purpose is an interpretation, not stated Agency guidance.

Lease guarantees. USDA cannot guarantee the tenant's lease payments under 5001.115(e). The guaranteed loan is the lessor's own amortizing debt, and the lease is evidence of repayment capacity, not the guaranteed obligation.

Related-party leases. Where a property company leases to an affiliated operating company, expect USDA to require co-borrowers under 5001.126(a)(2). OIG's B&I audit in Georgia (Report 34601-5-At) questioned loan funds used to buy equipment that was then rented back to a related business, the pattern 5001.122(h) now prohibits.

What the lender should ask for. The master service agreement or lease form; the schedule of services the borrower supplies; who holds the utility contract; who owns the mechanical and electrical plant; and the management agreement, if any, with its oversight terms.

At the Cushman & Wakefield 2026 all-in benchmark of $17.6 million per MW for a modern greenfield facility (3 September 2026), $25 million of total B&I debt finances only a few megawatts, before equity. B&I therefore fits phase one of an edge, enterprise or small colocation facility of roughly 1 to 3 MW, not a hyperscale or wholesale project. A powered core and shell with the tenant funding the fit-out has been disclosed at $1.5 million per MW (Core Scientific, SEC filing, 2025), which stretches the cap to a larger facility, but that is the lessor structure that sits under the 5001.115(g) judgement call. The study states the phase that fits inside the cap and the DSCR on that phase alone.

Under 5001.3 a feasibility study is a report, including an opinion or finding, by an independent qualified consultant that evaluates economic, market, technical, financial and management feasibility as set out in Appendix A to Subpart D. It is required on B&I guaranteed loans over $1 million to a new business (5001.306(a)(3)(i)). USDA may require one on loans of $1 million or less where the lender's analysis is insufficient (5001.306(a)(3)(ii)), and whenever it cannot find a basis for repayment or the project will significantly affect existing operations (5001.303(c)(4)). Integrated processing equipment and systems need a technical report (5001.306(a)(3)(iii)). Part 5001 does not define independence beyond "qualified, independent third party"; MMCG's position is that the author holds no ownership stake, earns no success fee and has no role in packaging the loan.

The 37 factors are enumerated and annotated in The 37 Factors of 7 CFR Part 5001.

Jobs are part of the B&I purpose under 5001.105(a), and creating or saving jobs is an express condition for acquisitions, start-ups and expansions under (b)(2). Part 5001 sets no minimum jobs-per-dollar ratio. Priority scoring awards five points for at least five jobs paying above 150 percent of the federal minimum wage (5001.318(d)(6)).

Data centers carry high capital per job, and the published benchmarks are stark. Food & Water Watch's January 2026 brief, using Virginia Economic Development Partnership records back to 1990, found one permanent job per $13 million of data center investment, and one per $54 million for projects announced from 2020 through late 2025. A 2026 Illinois Economic Policy Institute and University of Illinois report projects $57 billion of investment through 2035 creating 2,800 direct permanent positions, about $20 million per job. Google's Cedar Rapids, Iowa facility committed at least 31 full-time jobs for a $576 million investment. The U.S. Chamber Technology Engagement Center's industry estimate, by contrast, counts direct, indirect and induced jobs together.

The study reports direct permanent full-time positions separately from construction and induced jobs, shows capital per direct job beside these benchmarks, documents saved jobs only where an existing rural employer's operations depend on the facility, and rests eligibility on the (b)(1) and (b)(3) purposes, which carry no express jobs clause, rather than on an inflated headcount. A lender reading an inflated jobs claim will discount the rest of the file.

REAP. On 31 March 2026 the Rural Business-Cooperative Service said in a published FAQ that it would make no further REAP grant awards until it amends 7 CFR Part 4280, Subpart B, to comply with Executive Order 14315 of 7 July 2025; the October 2024 notice is to be rescinded, Energy Audit and REDA grants are not funded in 2026, and pending applicants must reapply under the new rules. REAP guaranteed loans continue under OneRD, subject to Unnumbered Letters that restrict certain solar and wind projects. A small rural data center operator can, as a judgement call, be an eligible rural small business for an on-site solar or efficiency project, provided it certifies its NAICS code and meets the SBA size standard for that code, the technical merit rules in 5001.106(e) and 5001.107(d), the REAP cap of $25 million and the 25 percent borrower contribution under 5001.406. REAP does not finance the data center itself.

Community Facilities. CF borrowers must be public bodies, nonprofits or tribes (5001.126(b)), and the facility must be for public use (5001.103(b)). Under 5001.116(b), inherently commercial enterprises are ineligible, and the listed examples include telecommunication facilities and services, including broadband and fiber network services, that do not meet 5001.103(a)(6), which covers public safety, medical and educational telecommunication end-user equipment. A commercial colocation facility is excluded. A county, school district or hospital data room supporting public safety, medical or educational links can fit, and commercial leasing inside a CF project must stay under 25 percent of floor space and relate to the primary purpose (5001.103(d)).

ReConnect. 7 CFR Part 1740 funds the capital costs of facilities needed to provide broadband service in rural areas lacking 100/20 Mbps service. A standalone data center is not a ReConnect purpose. Network facilities such as a carrier hotel or an edge node that serve a funded broadband system may be eligible costs under the current notice, as a judgement call.

Executive Order 14318 of 23 July 2025, Accelerating Federal Permitting of Data Center Infrastructure, directs Commerce to arrange financial support for Qualifying Projects of more than $500 million of capital or more than 100 MW of new load, assigns USDA no data center lending role, and defines projects far larger than the B&I cap. The President's FY2027 budget request eliminates discretionary funding for rural business loans and grants, which includes B&I (USDA FY2027 Budget Summary, April 2026); the House passed H.R. 8646 on 4 June 2026 by 213 to 210, and the program's FY2027 authority depends on the final appropriation. The December 2025 OneRD final rule did not touch the data center-relevant paragraphs, and no OneRD proposed rule on data centers was pending as of 4 October 2026. USDA's Lender Lens dashboard, launched 19 January 2026, publishes the guaranteed portfolio down to the individual loan and is the right place to check precedent by industry code. See USDA Financing and Grant Monitor, Fall 2026.

MMCG reviewed Rural Development award charts from October 2016, May 2022 and August 2023, a September 2026 state release, and RUS electric loan charts from 2018 to 2024, and found no B&I, REAP, RBDG, REDLG, Community Facilities, ReConnect or RUS electric financing made to a data center, colocation or hosting borrower. The May 2022 chart lists a B&I guarantee to a cellular and mobile data provider, which is telecom, not a data center. The nearest RUS item is a 2018 loan of $7.01 million to Seminole Electric Cooperative in Florida for a headquarters building housing its own business continuity center. Broker pages advertise B&I guarantees for data centers in principle and name no closed transaction. A small guarantee to an IT firm could exist without a press release, so the position is "no confirmed public record found," not "none exist."

Rural sites are usually served by a distribution cooperative that passes through the wholesale terms of its generation and transmission supplier. East Kentucky Power Cooperative's Data Center Power tariff (Kentucky PSC Case 2025-00140) carries a non-refundable application fee scaled by load and a utility-led load study coordinated with PJM. Rappahannock Electric Cooperative's Schedule LP-DF (Virginia SCC PUR-2025-00048) charges on installed MVA for dedicated substations. The Tennessee Valley Authority Board approved a separate data center rate class on 20 August 2026 with a capacity commitment charge for new or expanding loads above 5 MW, paid over three to five years. Tri-State Generation and Transmission's proposed large-load tariff, with a $2.7 million per MW security deposit, was rejected by FERC in late 2025 (Colorado Sun, 10 December 2025). MMCG found no published RUS loan condition specific to data center load. For a co-op-served site the study requests the G&T wholesale contract, any RUS mortgage consent requirement and the G&T's own large-load terms, because the co-op's minimum bill is often a pass-through. The hub page's power section covers investor-owned utility tariffs: Data Center Feasibility Study.

MMCG prepares USDA feasibility studies under USPAP discipline to the five components and 37 factors of Appendix A to Subpart D. The author holds no interest in the transaction, earns no success fee and takes no role in packaging the loan. Every figure in the study carries a documentary source: the regulation, the Federal Register notice, the utility agreement, the executed lease, the county record or the published benchmark. Facts that exist only in conversation are restated on a documentary basis or placed in a signed management representation. Methodology

Engagements start at $4,900 with fixed-fee scoping. Standard delivery is 9 to 16 business days, with rush turnaround from 5 days. A senior analyst responds within 12 business hours. For a preliminary eligibility memo on a lessor or colocation structure before a full study, say so in the brief.

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Related: Data Center Feasibility Study · SBA Data Center Feasibility Study · USDA Feasibility Study · The Fifty-Four-Million-Dollar Job · The 37 Factors of 7 CFR Part 5001

Prepared by Michal Mohelsky, J.D., FMVA, Practicing Affiliate of the Appraisal Institute.