All About USDA Loans: Financing for Rural Entrepreneurs

Rural businesses contribute to American communities in calculable and incalculable ways — agriculture alone makes up nearly a fifth of the workforce in Merchants & Marine Bank’s home state of Mississippi, either directly or indirectly. But rural business owners keep facing headwinds as they’re working to grow. Among the biggest problems they cite: finding funding. 

SCORE, a non-profit organization focused on educating and mentoring entrepreneurs, says that 40% of rural small business owners struggle to access capital. So, most of them end up using personal savings to support their business.  

If that feels familiar, there’s a business funding option that may provide a solution: a USDA Business Loan. These loans are guaranteed by the U.S. government, designed to help rural business owners grow, and provided by lenders like our Voyager Lending division. 

Understanding USDA Loans

A quick introduction: USDA Business Loans were designed specifically for rural businesses, with the intent of stimulating economies in local communities that have been underserved by traditional lenders.  

Since the USDA Rural Development Business & Industry program guarantees the loans, there’s more leeway to offer flexible terms, low interest rates, and favorable repayment options that fit the needs of rural entrepreneurs. 

Are You Eligible for a USDA Loan?

A few factors to consider if you’re wondering whether a USDA Business Loan is a good funding option for your business: 

‘Rural’ Is a Must

If you’re a legal U.S. resident and the financing you need is intended to create or save jobs in a rural U.S. community, you may be a fit. (The USDA considers “rural” to be an area that’s not in a city or town with a population over 50,000.)

You can search eligible areas through the USDA website, or the Voyager Lending team can help walk you through the process and possibilities. 

Many Business Types Fit

USDA Business Loan requirements are broad when it comes to the type of business that’s eligible. You can be for-profit, non-profit, or cooperative, focused on agriculture, manufacturing, retail and beyond. Whether you’re expanding a farm or opening a local store, a USDA Business Loan might suit your business. 

Benefits of USDA Loans

USDA Loans Are Accessible

If traditional lenders overlook your community, USDA loans were designed to fill the gap. That mission aligns perfectly with our community bank’s focus — we serve many rural communities in Mississippi and Alabama with personal and business banking services, and Voyager Lending expands that reach. Voyager offers government-backed lending options (including USDA Loans) to small businesses throughout the continental U.S., with a focus on the Southeast, where our Clients and neighbors (and team members) live.  

USDA Loans Are Tailored for Rural Needs

USDA loan offerings grew out of rural needs. Small businesses in rural communities need flexibility — things like low fixed interest rates, longer repayment periods and no prepayment penalties. Terms like those empower small businesses to grow, modernize, purchase equipment or supplies or open new locations, while still covering operational costs. 

USDA Loan Challenges to Consider

No loan is a perfect fit for every business. Keep these factors in mind while you’re researching options:

There Are Restrictions on How Funds Are Used

Since USDA Loans were designed to stimulate growth in rural areas, that intent informs restrictions on eligibility and use. The funds need to stay in the U.S. and support local jobs. They can’t be used for certain ventures (like rental housing, golf courses and racetracks). If your project or growth plans don’t align with requirements, even if your business fits the “rural” bill, you might not qualify for a USDA Business Loan.   

Applications Are Detailed

Applying for a USDA Business Loan is a detailed and thorough process, meant to ensure that your business is both eligible for the program and financially ready to manage the loan.   

Ask the USDA Loan Experts

Voyager Lending knows USDA Business Loans front to back. If you need an expert to walk you through the specifics and guide you on whether your business and growth plans align with USDA Business Loan eligibility, contact the Voyager Lending team. They’d love to help.