Securing Your Loan with a Comprehensive USDA Feasibility Study

Are you seeking a loan from:

 

Federal and State-chartered banks

Savings and loans

Farm Credit Banks with direct lending authority

Credit unions

With USDA Business & Industry Loan Guarantees (B&I Guarantees)?

 

You can use a B&I Guarantees loan for:

 

• Business conversion, enlargement, repair, modernization, or development

• The purchase and development of land, buildings, and associated infrastructure for commercial or industrial properties

• The purchase and installation of machinery and equipment, supplies, or inventory

• Debt refinancing when such refinancing improves cash flow and creates jobs

• Business and industrial acquisitions when the loan will maintain business operations and create or save jobs

 

To support your loan request, the USDA requires a feasibility study. In cases where the borrower entity doesn't have any operational history, typically as a start-up or an SPV (special purpose vehicle), the feasibility study is mandatory to obtain a loan guarantee.

 

A USDA feasibility study is a detailed analysis that considers all critical aspects of a proposed project to determine the likelihood of its success. Because the USDA guarantees the loan, they need to ensure your project is feasible. The feasibility study required by the USDA presents a forecast of the financial performance of your project.

 

For the Business & Industry Loan USDA feasibility study, the scope of the work is outlined in the Code of Federal Regulations, 7 CFR 5001 (§§ 5001.320-5001.400) Appendix A to Subpart D of Part 5001. You can download the USDA B&I scope of the work here.

 

A comprehensive USDA feasibility study must rationalize and prove the demand for your project's products or services. It is necessary to calculate, describe, and present capacity, consider efficiency factors, and identify weak parts of the production scheme.

 

The USDA feasibility study must demonstrate feasible financial performance, including Debt Service Coverage Ratio, Pro forma assumptions, Discounted Cash Flow, Internal Rate of Return, Sensitivity and Breakeven analysis, or Monte Carlo Simulations.

 

The key to a successful USDA feasibility study is to reflect other requirements that are outside the defined scope of work. The purpose of the B&I Guaranteed Loan Program is to improve, develop, or finance business, industry, and employment, thereby enhancing the economic and environmental climate in rural communities.

 

The USDA feasibility study should also show how your project will impact the local economy, employment, and environment in the influential area. Proving these elements is crucial for obtaining a USDA loan guarantee.

 

MMCG Invest is here to support your loan request. Contact us to help you understand the risks the USDA might see in your project.

 

MMCG Invest is a USDA feasibility study consultant with years of unique expertise. Contact us for a free initial consultation to discuss your project.