USDA Rural Business Loan Guarantee vs SBA Loan Guarantee

[Kyle Southard]

Greetings,

Does anyone have experience using the USDA Rural Business and Industry Loan Guarantee, or the SBA Loan Guarantee? Bottom line: trying to figure out which one to use with a wedding planning business's purchase of a rural wedding venue.

Details: fiancee is a wedding planner who has been in business for 3+ years, earning money for her consulting services. With this real estate purchase, she can now charge for her services and for use of the venue, which is huge plus for the business.  We have a buy-sell agreement on a venue, and just need to finance it now (our deadline is December 2017, but we want to get it as soon as possible).  The venue is in a USDA-deemed "rural" area, and is USDA Rural B&I Loan-eligible.  Ideally, we do not want to put any money down, which is why we're looking for USDA or SBA coordination.  Does anyone know which route--USDA or SBA--would be optimal for financing? 

Any anecdotes (good or bad) or advice would be greatly appreciated!

[Scott Snow]

Honestly, both products could work for this deal and the lender will probably decide which is a better fit for them so I would not worry too much on that. USDA  requires a 20% tangible net worth or equity injection into the deal but many of the other aspects are the same as SBA. An SBA lender would most likely want 15-20% down as well for a rural deal. You will need financials that show you can cash flow the project and probably projections if this is an expansion of business along with a business plan. There is no way to do a no money down deal either way. You can do some seller carryback financing for some of the equity but it would have to be on standby for it to count, meaning no payments for the life of the loan. 

Contact some local SBA bankers as most do SBA & USDA anyway. They should be able to talk you through it and answer more questions.