USDA Feasibility Study
Are you seeking a loan from:
Federal and State-chartered banks
Savings and loans,
Farm Credit Banks with direct lending authority
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.
USDA requires a feasibility study to support your loan request. In cases the borrower entity doesn't have any operation history, typically as a start-up or an SPV (special purpose vehicle), the feasibility study is mandatory to obtain a loan guarantee.
The feasibility study is defined as a detailed analysis that considers all of the critical aspects of a proposed project in order to determine the likelihood of its success.
Because USDA is vouching to the lender that if you don't fill your duty from the contract (typically by not paying you loan payments), USDA wants to know if your project is feasible; more practically, 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 according to Code of Federal Regulations, 7 CFR 5001 (§§ 5001.320-5001.400) Appendix A to Subpart D of Part 5001 is applicable. You can download the USDA B&I scope of the work here.
A feasibility study must rationalize and prove the demand for your project products or services. It is necessary to calculate, describe and present capacity, consider efficiency factors, and describe weak parts of the production scheme.
USDA feasibility study must prove feasible financial performance, as is 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 feasibility study is to reflect other requirements which are outside the scope of the work's scope.
The purpose of the B&I Guaranteed Loan Program is to improve, develop, or finance business, industry, and employment and improve the economic and environmental climate in rural communities.
The feasibility study prepared for USDA should also present and prove how your project will affect the influential area's local economy, employment, and environment. Only after proving fulfilling these elements will your project's endeavor obtain a USDA loan guarantee.
MMCG Invest is here to support your loan request. Contact us to help you understand the risks that USDA might see covered in your project.
MMCG Invest is a USDA Feasibility study consultant with years of unique know-how. Contact us for a free initial consultancy to discuss your project.
Have a particular challenge you're trying to deal with? Let's discuss your project and see what we can do for you.
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