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The USDA loan funding gap:
How to overcome the challenge of USDA application delays

Facing a long wait to access a loan under the USDA loan guarantee program? You’re not alone…

You already have a strong business and a clear vision for your growth.

Perhaps you have begun thinking about how you will fund this growth and you may have even checked your eligibility for a USDA guaranteed loan, or better yet, begun the application process.

But you’ve heard a USDA guaranteed loan comes with a significant delay to access capital – a delay that halts your growth plans and potentially puts you on the back foot.

We have the solution…

What is the USDA guaranteed loan program?

Broadly speaking, the USDA guaranteed loan program refers to a host of schemes by the United States Department of Agriculture that have the shared goal of enhancing the economic development of rural regions of the country.

In 2020 the USDA unified four of its flagship guaranteed programs under a single banner – the One Rural Development (OneRD) Secured Loan Initiative – with the aim of simplifying and speeding up access to the schemes, and encouraging more lenders to join.

Aside from the obvious benefits of the programs for lenders – offering a guarantee to help mitigate their risks – the USDA OneRD Secured Loan Initiative benefits rural businesses by making it easier for them to secure capital and to access competitive rates and terms. The impact is improved economic development of rural areas – creating jobs, improving infrastructure and enhancing the quality of life of rural Americans.

You can find more detailed information about the USDA OneRD Secured Loan Initiative and its benefits here.

The challenge: waiting for USDA loan approval

Securing funding through one of the USDA guaranteed loan programs can be a game changer for businesses and individuals alike. However, the journey from application to disbursement can often be prolonged, leaving borrowers in a precarious position while they await funds.

The USDA loan process is renowned for its thoroughness, designed to ensure that funds are allocated responsibly and effectively. Yet, this comes at a cost: time.

Delays in approval and disbursement can arise due to various factors, including bureaucratic procedures, extensive paperwork and capacity constraints driven by the high volume of applications received by the USDA.

As a result, borrowers are left facing a funding gap while they wait for their USDA loan to materialise.

Mind the gap

From projects being placed on hold, or unable to commence, to missed opportunities for expansion and/or investment and even operational setbacks, the business risks associated with delays in access to USDA funding are extensive.

Moreover, the uncertainty surrounding the timeline of loan approval adds another layer of stress for borrowers who are dependent on these funds to commence, sustain or grow their operations.

How to bridge the gap

Fortunately, there exists a pragmatic solution to this funding gap: USDA interim finance.

Designed specifically to address the interim financial needs of borrowers awaiting USDA loan approval, USDA interim finance (also known as a USDA bridge loan) offers a lifeline to businesses during these critical junctures. By providing expedited access to capital, USDA interim finance empowers borrowers to navigate the waiting period with confidence.

As the name suggests, a USDA bridge loan bridges the gap between application for a loan under the program and USDA guarantee program approval, giving businesses access to cash in as little as two weeks.

Benefits of USDA interim finance

If you have already applied for a loan under any of the government’s OneRD programs, it is more than likely that you have a planned use for those funds and any delay in accessing capital means that these plans are delayed too.

A USDA bridge loan enables you to accelerate these plans, moving the business and/or project forward, capitalising on ripe opportunities.

Benefits include:

  1. Accelerated growth plans: Secure funds now and get growth plans going today, without the delay of waiting for approval from the USDA loan program
  2. Flexible use of funds: Use the cash for the same purposes as your initial application – from acquiring another business to expansion, inventory, and upgrading equipment
  3. Seamless USDA guaranteed loan integration: As we work collaboratively with your USDA lender, we are able to leverage the information you provided as part of your initial USDA guaranteed loan application – no need for separate applications, no need to explain your current lender’s processes

How do I get a USDA bridge loan?

Awareness of the USDA funding gap is a positive step towards accelerating your business’s growth. The next move is to close the gap, by securing USDA interim finance or a bridge loan.

You will need to establish a relationship with a specialist lender, as they will possess a thorough understanding of the USDA guarantee loan approval process and will already have connections with various USDA lenders and stakeholders. If you are at this stage of your USDA journey, you can book a call with a member of our expert team here, or use this link to get in touch.

We will then liaise directly with your existing USDA lender and obtain the relevant information needed to move things forward, leveraging your existing application details for our own underwriting processes, to avoid you having to submit the same information twice.

The rest of the process follows that of a conventional loan application, with a keen focus on keeping things as quick and efficient for you as possible, enabled by our extensive experience in debt financing.

We understand that every business is unique. That is why we work to accommodate your specific needs, working closely to structure bridge loans that align with your growth goals. Accelerate your growth today – start a conversation with our team.