The 7 CFR Part 5001 Handbook: USDA OneRD Guaranteed Loans, Section by Section

7 CFR Part 5001 is the single regulation behind USDA's four guaranteed loan programmes: Business and Industry, Community Facilities, Rural Energy for America and Water and Waste Disposal. It decides when an independent feasibility study is required, who may write it, what it must contain, and what a lender can lose when it is wrong. This handbook walks the regulation section by section, quotes the operative text, resolves the confusions that recur in credit files, carries the FY2026 fee and guarantee schedule, and sets out what USDA's own auditors have said gets sent back. It is the reference our USDA work is written to, and the page every other USDA page on this site points to.

How to use this handbook

The regulation is long, published on eCFR as searchable text except for its two most important appendices, and amended five times since 2020. Practitioners tend to work from summaries, and the summaries carry errors that surface at State Office review: population thresholds borrowed from the direct-loan programmes, equity and term rules borrowed from the superseded Part 4279, a citizenship test the current rule does not contain, and a feasibility trigger quoted from the 2020 text after the 2024 amendment changed it.

This handbook is organised to be read in two ways. Read straight through, it is a course in the regulation. Read by section number, it is a lookup: every trigger, threshold, fee and definition is tied to the paragraph that creates it, and every figure that comes from the annual Federal Register notice rather than the Code is marked as such. Where the regulation is silent, we say so rather than fill the gap with practice. Where we state a practice, we label it.

Three companion pages carry what this one does not. Our USDA feasibility study service page describes the deliverable and its data layer. Our USDA feasibility study consultant page treats the preparer, independence and acceptability in depth. And the insights articles linked throughout take single questions further than a handbook should. This page is the spine they hang from.

Part 1. The regulation

1.1 What OneRD is

The OneRD Guaranteed Loan Regulation was published at 85 FR 42494 on 14 July 2020 and took effect on 1 October 2020. It replaced four separate guaranteed-loan rulebooks with one: Water and Waste Disposal guarantees under Part 1779, Community Facilities guarantees under Part 3575, Business and Industry guarantees under Part 4279 Subpart B with servicing under Part 4287 Subpart B, and Rural Energy for America guarantees under Part 4280 Subpart B. Applications complete before 1 October 2020 stay under the legacy rules, and Part 4279 Subpart B was preserved for the B&I CARES Act programme (1)(2).

The consolidation was deliberate: one Lender's Agreement, one application form, one set of definitions, one annual notice of fees and guarantee percentages, and the stated aim of a consistent process "in any program, any office" (3). The four programmes still differ where their statutes differ, and the differences that matter to a feasibility study are the subject of Parts 3 and 6 below.

1.2 The structure

The five appendices to Subpart D are where the feasibility content lives. Appendix A, Feasibility Study Components, is the codified content standard for the study. Appendix B, Financial Feasibility Reports, is the standard for the Community Facilities financial feasibility report. Appendices C, D and E set the content of REAP technical reports by project cost tier (1)(4).

One publication fact governs everything that follows. Appendices A and B were entered in the Federal Register in July 2020 as scanned images. eCFR renders them as pictures, not text; they cannot be searched, copied or cited by line. The same content exists as searchable text in RD Instruction 5001, the Agency's internal reproduction of the part (Procedure Notice 648, 10 July 2025), and Appendix A's text is reproduced word for word as Appendix D to Subpart B of Part 4280, the REAP grant rule, whose preamble states that it conforms to the Part 5001 appendix (4)(5)(6). We quote Appendix A from those sources.

1.3 The amendment record

Two things to take from the table. The definition of a feasibility study at 5001.3 and the content standard at Appendix A have not been amended since 2020. The sections that decide when a study is required, 5001.304 for CF, 5001.306 for B&I and 5001.307 for REAP, were all rewritten in the 2024 rule, and the B&I trigger changed its operative term. A summary written against the 2020 text is wrong on that point (1)(7)(8).

No proposed rule specific to Part 5001 was pending as of September 2026.

1.4 Where the numbers live

Part 5001 sets ceilings and architecture; the annual Federal Register notice sets the numbers. The maximum guarantee under 5001.407 is 90 per cent; the actual percentage each year is published under 5001.10. The guarantee fee under 5001.454 has a codified ceiling by programme (5 per cent for B&I, 4 per cent for CF, 3 per cent for REAP and for WWD), and the annual notice sets the rate actually charged. The same is true of the periodic retention fee under 5001.455 and the fee for issuing the Loan Note Guarantee before construction is complete under 5001.456. Since the 2024 amendment, the rate applied is the rate in effect for the fiscal year in which the loan is obligated, and it stays for the life of the guarantee (9).

The practical consequence is that a study, a credit memorandum or a website that states "the B&I guarantee is 80 per cent" as a permanent fact is misstating the law. The guarantee is whatever the notice for the fiscal year of obligation says. The FY2026 notice is at 91 FR 11272, published 9 March 2026 and effective retroactively to 1 October 2025, five months into the fiscal year; the FY2025 notice at 89 FR 53041 published on 25 June 2024, and the FY2024 notice at 88 FR 42909 on 5 July 2023, both before their fiscal years began. No FY2027 notice had published as of September 2026, and the FY2026 pattern suggests lenders should not assume one arrives on time (9)(10)(11).

1.5 Guidance below the regulation

Only Part 5001 and its appendices bind. The documents below interpret or restate it and are worth knowing for what they add and for what they no longer govern.

RD Instruction 5001 (Procedure Notice 648, 10 July 2025) is the Agency's internal reproduction of the part, appendices included, and the most practical way to read Appendix A as text. The OneRD Lender's Guide is informal, non-binding lender guidance that maps the six subparts and points lenders to the section for each question; it does not alter any trigger. The B&I and CF Lender Complete Application Checklists list the feasibility study, appraisal and engineering items; they are reference lists, not scoring rubrics. For Water and Waste Disposal, the interagency preliminary engineering report outline and RUS Bulletin 1780-2 inform the engineering documentation the programme requires; they are adopted at State discretion and concern engineering, not feasibility (5)(12)(13).

Three legacy documents still circulate and no longer govern Part 5001 loans. The legacy B&I feasibility rule at 7 CFR 4279.150, which required a study "for new businesses" and stated that "the income approach of an appraisal is not an acceptable feasibility study," applies only to pre-October-2020 B&I loans and to CARES Act B&I loans. RD Instruction 4279-B, Appendix E, "Guide for Completion of Feasibility Studies," revised October 2016, is the pre-OneRD administrative guide and carries the same status. And 7 CFR 1980.442, the older standalone B&I rule, contains the fullest legacy factor descriptions and a waiver clause for existing businesses that Part 5001 does not reproduce. Each is useful for history; none should be cited as the operative standard on a OneRD file (14)(15)(16).

Part 2. The definitions that decide the file

Section 5001.3 opens: "The following definitions are applicable to the capitalized terms used in this part." The ones below decide whether a study is required, who may write it, and what it must show. Quotations are the current eCFR text.

Feasibility study. "Feasibility study means a report including an opinion or finding conducted by an independent qualified consultant(s) evaluating the economic, market, technical, financial, and management feasibility of the proposed project or operation in terms of its expectation for success as outlined in appendix A to subpart D of this part." Three elements are load-bearing: an opinion or finding, an independent qualified consultant, and the five named factors as outlined in Appendix A (17).

Qualified consultant(s). "Qualified consultant(s) means an independent third-party person possessing the knowledge, expertise, and experience to perform the specific task required." The part uses "independent qualified consultant" in the application sections; the defined term is "qualified consultant," and independence is built into it. There is no separately defined "independent qualified consultant" (17).

New business. "New business means a business that has been in operation for less than one full year and a business that has been in operation for at least one full year and has not achieved full operational capacity or stable operations as determined by the Administrator, including a new enterprise or new affiliate of an existing business moving or expanding into a new location involving new market or labor areas." This is the B&I study trigger since the 2024 amendment, and it captures more than sponsors expect: a ramping business past its first anniversary, and an established operator's expansion into a new market or labour area, are both new (17).

Existing business. "Existing business means a business that has been in operation for at least one full year and has achieved full operational capacity or stable operations as determined by the Administrator." Mergers, name changes and co-borrower structures pairing a new and an existing business are treated as existing "provided there is not a significant change in operations" (17).

Rural and rural area. "Rural and rural area means any area of a State not in a city or town that has a population of more than 50,000 inhabitants, and which excludes certain populations pursuant to 7 U.S.C. 1991(a)(13)(H), according to the latest decennial census of the United States and not in the urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants." The definition adds that "Applications cannot be approved subject to meeting rural area requirements," names the Rural Development Property Eligibility Map as the delineation of ineligible areas, and sets out the exceptions: a project-specific "rural in character" determination by the Under Secretary, a two-census-block "string" exception, and special rules for Puerto Rico, Hawaii and the freely associated states (17).

This is the single most misstated rule in USDA feasibility work, so it deserves a plain statement. For all four OneRD guaranteed programmes the population test in the regulation is 50,000. The 20,000 figure belongs to the Community Facilities direct loan and grant programmes (Part 3570), and the 10,000 figure to the Water and Waste Disposal direct programme (Part 1942). Inside Part 5001 those two numbers appear only as scoring and reservation-of-funds thresholds: 15 priority points and a funds reservation for CF projects in communities under 20,000 at 5001.316, and 20 priority points for WWD projects primarily serving areas under 10,000 at 5001.317. They are not eligibility caps on a guaranteed loan. A study that treats a 35,000-population town as ineligible for a CF guarantee has applied the wrong programme's rule (17)(18)(19).

Financial feasibility. "Financial feasibility means the ability of a project to achieve sufficient income, credit, and cash flow to financially sustain the project over the long term and meet all debt obligations." (17)

Debt service coverage ratio. "Debt service coverage ratio means the ratio obtained when taking earnings before interest, taxes, depreciation, and amortization less reasonably expected replacement capital expenditures divided by the annual debt service (principal and interest payments) of the borrower." Note the deduction of replacement capital expenditure from the numerator; a study that computes coverage on unadjusted EBITDA is not using the regulation's ratio (17).

Business plan. A "comprehensive document" describing ownership, management and how the borrower will operate the project, and, "If a business or industry is in decline or financial distress," how the project "differs from the current industry trends or improves the borrower's financial position." The business plan is the document the Agency tests before deciding whether to require a study (17).

Complete application. One that "contains all parts necessary for the Agency to determine borrower and project eligibility, the financial feasibility and technical merit of the project, and contains sufficient information to determine a priority score." The clock on the Agency's response runs from completeness, not from submission (17).

Conflict of interest. "A situation in which a person has personal, professional, or financial interests that prevent, or appears to prevent the person from acting impartially," expressly including "A person acting as a compensated agent of the borrower and the lender on the same guaranteed loan" and "Refinancing debt that is owned by a loan packager, broker, or referral agent or its affiliates." (17)

Negligent loan origination. "The failure of a lender to perform those services or actions that a reasonably prudent lender would perform in originating its own portfolio of loans that are not guaranteed," including "failure to act, not acting in a timely manner, and acting in a manner contrary to the manner in which a reasonably prudent lender would act." This is the standard under which a deficient study becomes a loss-claim reduction (17).

Passive investor. "An equity investor who does not actively participate in management and operation decisions of the borrower or any affiliate of the borrower as evidenced by a contractual agreement." Passive investors are outside the guarantee requirement at 5001.204 and the ineligibility look-through at 5001.127 (17).

Working capital. Defined since the 2024 amendment as "current assets available to support a business' operations and growth," calculated as current assets less current liabilities (17).

Terms the part uses but does not define. "Tangible balance sheet equity" is not a defined term in Part 5001; it was a Part 4279 concept and the current rule works instead through the balance-sheet equity tests at 5001.105(d). "Start-up" is not defined; the concept is carried by "new business." "Refinancing" is not defined; it is governed operationally by 5001.102(d) and 5001.121. "Substantial change" is not defined; the related defined term is "material adverse change," and "existing business" turns on a "significant change in operations." "Loss claim" is not defined on its own; only "final loss claim" is. A study that leans on any of the undefined terms should anchor to the operative section instead (17).

Part 3. When the study is required, programme by programme

3.1 The trigger matrix

3.2 The operative sentences

Business and Industry, 5001.306(a)(3)(i): "For guaranteed loans greater than $1,000,000.00 to a new business, a feasibility study prepared by an independent qualified consultant acceptable to the Agency is required. The scope of the feasibility study will be determined by the Agency and is dependent on the complexity of the project and the borrower." (7)

Community Facilities, 5001.304(a)(4)(i): "For guaranteed loans greater than $1,000,000.00 to a new entity or an entity conducting a new activity, a feasibility study prepared by an independent qualified consultant acceptable to the Agency is required. The scope of the feasibility study will be determined by the Agency and is dependent on the complexity of the project and the borrower." (20)

Rural Energy for America, 5001.307(d): "Feasibility study. For RES projects only, when deemed necessary by the lender or Agency, an analysis conducted in conformance with the definition of feasibility study found in § 5001.3 and with applicable content in appendix A to subpart D of this part." (21)

The residual authority, 5001.303(c)(4): "If the Agency is unable to determine a basis for successful repayment of a guaranteed loan based on the documentation and analysis of the five feasibility study components provided in the lender's analysis, borrower's business plan, or other project information, or if the proposed project will have significant impacts on existing operations, the Agency may require an independent feasibility study. The elements of an acceptable feasibility study may vary by project scope and should be prepared by a qualified, independent third party using applicable elements of the project, including but not limited to those outlined in appendix A to subpart D of this part." (22)

3.3 Three things the matrix does not say, and one it does

First, the CF trigger and the B&I trigger use different terms. B&I captures a "new business," a defined term. CF captures "a new entity or an entity conducting a new activity," which is not defined and which reaches an established entity that launches something new. A hospital district adding a skilled nursing wing is not a new entity; it is an entity conducting a new activity, and over $1 million it trips the mandatory study. Since the 2024 amendment the two programmes have diverged on this point, and any summary that applies one term to both is wrong on one of them (7)(20).

Second, there is no waiver clause. The legacy rules let the loan approval official except an existing business from the study on a documented finding. Part 5001 contains no such sentence for the mandatory triggers. The lever the Agency retains is scope: the study's scope "will be determined by the Agency," and where a mandatory trigger is not met, whether to require a study at all is a case-by-case State Office determination under the discretionary provisions. Our article on when the study is waived treats the practical side of that determination (16)(23).

Third, the Agency may require a study on any loan of any size. The discretionary sentences in 5001.304 and 5001.306, and the residual authority at 5001.303(c)(4), reach loans of $1 million or less and loans to existing businesses, on two tests: insufficiency of the lender's material to determine technical feasibility, market feasibility or economic viability, and significant effect on an existing business's operations and historic cash flow. A $900,000 loan to a twenty-year-old operator that doubles its capacity can carry a study requirement (7)(20)(22).

And the one thing the matrix does say clearly: Water and Waste Disposal has no feasibility study requirement at all. It requires engineering documentation to "the level of detail the lender would typically require for a standard commercial loan," and the Agency "does not provide technical oversight or recommendations as to the technical feasibility of the project." A WWD file with a feasibility study in it has a document the regulation did not ask for; a WWD file whose system depends on one business customer has an economic-viability assessment the regulation did ask for (24).

3.4 "New business" in practice

The definition captures four situations that surprise sponsors. A business open less than a year. A business open more than a year that has not reached "full operational capacity or stable operations as determined by the Administrator." A new enterprise or affiliate of an existing business. And an existing business "moving or expanding into a new location involving new market or labor areas," which is the case that catches franchise operators, multi-site expansions and relocations. The "stable operations" call is the Administrator's, exercised in practice by the State Office, and no published Agency Q&A, Administrative Notice or National Appeals Division determination interpreting it was located in our research. The consequence is practical: on any file near the line, the classification should be settled with the State Office before the study is scoped, because the classification decides whether the study is mandatory, and the scope decides its cost (17)(23).

Part 4. The five factors and Appendix A

4.1 What Appendix A contains

Appendix A is titled "Feasibility Study Components." It opens with an executive summary, sets out the five factors named in the definition, each with a "What is it?" statement and a list of "Factors to consider," and closes with a recommendation and a qualifications block. Read as a list, the factors to consider run to thirty-seven across the five components: five economic, six market, nine technical, twelve financial and five management (4)(6).

The appendix closes with two instructions that are as binding as the factors: "Conclude with an opinion and recommendation presented by the consultant," and "Provide a resume or statement of qualifications of the author of the feasibility study, including prior experience." A study without a signed opinion, or without the author's qualifications, is incomplete on its face (4)(6).

4.2 How a reviewer reads the five factors

The regulation says what each component is. It does not say how much of it is enough, and it publishes no scoring rubric for the study. What follows is practitioner reading, labelled as such, of what State Office and National Office reviewers look for and what they send back.

Economic feasibility is the component most often written as a national macro overview and most often rejected for it. The appendix asks for a cost-benefit analysis of this project in this place: the inputs it needs and whether they exist locally, the contracts that secure them, the environmental exposure, the cost of the project against the revenue it creates, and the economic impact on the community, which is the number the priority score uses.

Market feasibility is the component that decides the file. Reviewers look for a defended trade area, demand quantified for the right customer cohort, competitive supply inventoried including the pipeline, and pricing triangulated against comparables. The recurring deficiencies are a radius trade area with no justification, demand inflated by a total-population proxy, and a supply analysis that stops at what exists today.

Technical feasibility on a conventional project is site, construction and operations; on anything with unproven technology it is the "product and process success record and duplication of results" factor, which reviewers treat as the test of whether the process has worked elsewhere at this scale. For REAP the technical report itself has to enable the Agency to determine technical merit, "in sufficient detail," and design drawings and process flowcharts are encouraged (21).

Financial feasibility is where the twelve factors are read as a checklist. The two that are most often missing are the assumptions list, which the regulation separately requires at 5001.303(b), and the sensitivity analysis, which the appendix names and does not define. Part 5 takes both further.

Management feasibility is the component most often treated as a résumé appendix. For a first-time operator in a regulated industry, reviewers look for a written third-party management agreement or an operator with a demonstrated record in the asset class; a management section that lists the sponsor's unrelated business experience is the deficiency.

Our article on deficiency letters and what reviewers check sets out the send-back patterns component by component.

4.3 Appendix B and the Community Facilities financial feasibility report

Every CF guaranteed loan must carry "a financial feasibility report prepared by a qualified firm or individual acceptable to the Agency," and the report must be "based on projected taxes, assessments, revenues, fees, or other sources of revenues in an amount sufficient to provide for project operation and maintenance, debt payments, and compliance with lender reserve requirements" (20).

The report comes in two forms. The lighter form, the financial feasibility analysis under 5001.304(a), "will be prepared by a qualified firm or individual who may be the lender," to the content standard in Appendix B, and the lender's credit evaluation may serve as it. That form is available where any of three conditions is met: a guaranteed loan of $25 million or less to an existing community facility; a loan secured by a general obligation bond or other tax-supported income sufficient to pay debt service for the life of the loan; or a borrower with audited statements showing, over the last three years, the ability to pay all existing and new debt service. The heavier form, the financial feasibility study with examination opinion under 5001.304(b), applies to every CF loan that does not qualify for the lighter form, and "must be prepared in accordance with the standards of attestation of the American Institute of Certified Public Accountants, and the preparer must have the requisite professional liability insurance in place." That standard is an attestation engagement, which in practice confines the heavier form to CPAs and CPA firms (20).

CF also carries the only asset-class-specific numeric constraint in the regulation: "Financial projections for projects that are assisted living facilities, skilled nursing facilities, or similar types of eligible residential facilities must be based on no more than 90 percent occupancy." And it carries the only named sensitivities: the report must take into consideration any interest rate adjustment under the note; other revenue sources and payment guarantors are "particularly important" for recreation projects; and where the facility's primary use is by a business on which its success depends, "the economic viability of that business must also be assessed" (20).

The National Office has said in writing what goes wrong with CF financial feasibility. Its March 2018 unnumbered letter on the requirements of financial feasibility evaluations for Community Facility applications reported that it continued "to find inconsistencies in administering the requirements," and that a major concern was a financial feasibility study "not supported by an examination opinion, when necessary." The tiering is the thing to get right first; the content follows (25).

Appendix B itself is image-published and we have not reproduced it here. The pre-OneRD CF guidance it descends from listed a signed opinion, five years of historic and five years of forecast statements, a ratio schedule, the forecast and demand assumptions, sensitivity analyses and governance and management information; that list is an analogue, not the appendix, and a CF preparer should work from the RD Instruction 5001 text (5)(25).

Part 5. Projections and sensitivity

5.1 The projection period and the assumptions list

The one place the regulation states a projection standard is 5001.303(b)(4)(iii), which applies to all four programmes: "Projected balance sheets, income statements, and cash flow statements or a financial model starting from the current financial statements through a minimum of two years of the project performing at full operational capacity or stable operations. Based on the type of project or at the discretion of the Agency, financial projections or models may be required from current financial statements up to the end of the term of the guaranteed loan. Financial projections must be supported by a list of assumptions showing the basis for the projections." (22)

Three rules follow. The floor is two years at stabilisation, not two years from closing, so a project with a three-year ramp needs at least five years of projections. The Agency may extend the requirement to the end of the loan term, and on a 30-year CF or B&I real estate loan it does. And the assumptions list is a separate, required document, not a paragraph in the narrative; a projection without it is incomplete under the regulation, whatever its quality. The borrower's balance sheet and year-to-date income statement must be dated within 90 days of the complete application under 5001.303(b)(4)(i), which is the bright-line recency rule in the part; there is no stated maximum age for the study itself (22).

5.2 Coverage: the ratio is defined, the floor is not

Part 5001 sets no numeric minimum debt service coverage ratio. It defines the ratio, at 5001.3, as EBITDA less reasonably expected replacement capital expenditure divided by annual principal and interest, and it requires the lender's credit evaluation under 5001.202 to include, where applicable, a global historical and projected coverage analysis consolidating affiliates and guarantors. The threshold is the lender's, set in its credit policy and its memorandum, and the study is read against that number. One codified exception exists on the refinancing side: where refinancing is the majority purpose of a loan to an existing business, 5001.102(d)(4)(iii) requires a historical coverage ratio of not less than 1.1x (17)(26)(27).

In practice, and this is practitioner reading rather than regulation, B&I lenders underwrite to something near 1.25x at stabilisation, and the study's financial section is written to demonstrate coverage at the lender's number on the regulation's definition of the ratio. A study that reports coverage on unadjusted EBITDA, or on a number that ignores replacement reserves, has not used the ratio the Agency defines.

5.3 What "sensitivity analysis" means here

The phrase appears once in the regulation, as the twelfth financial factor in Appendix A. It is not defined. The regulation does not name the variables, state a magnitude or set a coverage threshold the downside case must clear. The one USDA rule that does name sensitivity variables is the Section 9003 biorefinery programme at 7 CFR 4279.261, which requires "Sensitivity analysis, including feedstock and energy costs and product and Byproduct prices"; it is a different programme and is cited only to show what USDA looks like when it does specify (4)(28).

For the four OneRD programmes the content of the sensitivity analysis is inferred from the provisions around it. The assumptions list at 5001.303(b) identifies the variables. The global coverage analysis at 5001.202 supplies the ratio being stressed. The approval standard at 5001.315, that the loan be sound with a reasonable assurance of repayment, supplies the question. And for CF the regulation names three sensitivities in words: the interest rate adjustment under the note, the dependence on other revenue sources or guarantors, and the dependence on a tenant or business. A defensible sensitivity section, in our practice, stresses each variable on the assumptions list that the base case depends on, one at a time and then in a combined downside, and reports the year in which coverage falls below the lender's floor under each. REAP works differently: its operative screen is the simple payback defined at 5001.3, and the sensitivity that matters is the energy-savings or energy-production assumption behind it (17)(20)(22).

Part 6. The credit terms the study must reflect

A study built on a term, an equity level or a guarantee percentage the regulation does not allow is a deficient study, however good its market work. This part sets out the parameters a study has to be written against, with the section that creates each.

6.1 Rural area, project location and the map

The population test is at 5001.3 and is the 50,000 test for all four guaranteed programmes, as set out in Part 2. Eligibility turns on the location of the project, not the borrower's headquarters: 5001.105(c) allows a cooperative "headquartered in a non-rural area" to borrow for a rural project, and for a project split across the boundary "the Agency will guarantee only the amount necessary to finance that portion of the project located in the eligible rural area." Utility projects under CF and WWD that serve both rural and non-rural areas are eligible regardless of location with the guarantee limited to the rural portion. REAP projects by an agricultural producer may be in a non-rural area where the components are directly related to and co-located with the agricultural operation. A rural facility serving an urban customer base is eligible under B&I, because the test is the facility, subject to the anti-transfer-of-jobs and market-saturation limits at 5001.118(b) on loans over $1 million (17)(29)(30).

The Rural Development Property Eligibility Map delineates ineligible areas; the map is a determination aid and the regulation and 7 U.S.C. 1991(a)(13) control. Where a project sits in an urbanised area, the routes are the "rural in character" petition (project-specific, decided by the Under Secretary within a stated window after public notice) and the two-census-block string exception (which, once approved, covers any project in the area) (17).

6.2 Eligible borrowers, eligible purposes and the exclusions that surprise sponsors

Under 5001.126, CF and WWD borrowers are public bodies, including tribes, and non-profit organisations, with a credit-elsewhere certification and evidence of community support; a for-profit corporation may qualify for CF only if operated on a not-for-profit basis for the life of the loan. B&I borrowers are any legal entity "organized and operated on a profit or nonprofit basis," a tribe, a public body or an individual, engaged in or proposing to engage in business. REAP borrowers are agricultural producers or rural small businesses for renewable energy systems and efficiency improvements, and agricultural producers only for energy efficient equipment and systems (31).

An individual B&I borrower must be a U.S. citizen, a lawful permanent resident with a permanent green card, or a citizen or resident of the freely associated states, and "Applications will neither be approved, nor a conditional commitment issued subject to meeting the citizenship requirement." The frequently cited requirement that a corporate borrower be at least 51 per cent owned by U.S. citizens comes from the legacy Part 4279 rule and is not in 5001.126(d). A study or credit memorandum that recites it is citing superseded authority (31).

Refinancing is permitted under 5001.102(d) when the guaranteed loan extinguishes the debt refinanced, without a percentage limit when a new lender refinances another creditor's debt, and capped at 50 per cent of the use of funds when the applicant lender refinances its own debt, which must also be current for six months and receive better terms. Working capital is eligible under B&I only as a permanent working capital term loan, and is ineligible under CF. Owner-occupied housing is ineligible, and a bed and breakfast, hotel or motel qualifies only with the pro-rata value of the owner's living quarters deducted. Lines of credit cannot be guaranteed under any programme, though refinancing an existing line is an eligible B&I purpose. Golf courses, racetracks, for-profit zoos and safaris are ineligible under all four programmes. Agricultural production is eligible under B&I only when ineligible for FSA farm programmes and part of an integrated processing business, capped at the lesser of 50 per cent of the loan or $5 million with listed exceptions (27)(32)(33).

The B&I exclusions that surprise sponsors most often: independent living is ineligible and only nursing homes and assisted living with constant on-site medical care qualify; residential housing, including trailer parks and apartments, is ineligible where the primary purpose is housing; commercial rental where the borrower does not control tenants and services is ineligible except for industrial-site infrastructure; a charitable or fraternal organisation deriving more than 10 per cent of revenue from tax-deductible donations is an ineligible borrower; lending, investment and insurance institutions are ineligible except under REAP, the cooperative-fund provisions and New Markets Tax Credit structures; and a project already financed with tax-exempt obligations cannot be guaranteed (33)(34)(35).

6.3 Loan size and the guarantee

The 85 per cent B&I guarantee on loans under $5 million is new for FY2026 and is the first size tiering since the 2020 consolidation; B&I ran at a flat 80 per cent from FY2021 through FY2025. It applies to loans obligated on or after 1 October 2025, retroactively from the March 2026 notice (9)(10)(36).

6.4 Fees

The guarantee fee under 5001.454 is one-time, paid by the lender at or before closing, may be passed to the borrower, and is computed as loan amount times guarantee percentage times the fee rate. The periodic retention fee under 5001.455 is computed annually on the outstanding principal balance as of the date in the annual notice, times the guarantee percentage, times the rate fixed in the conditional commitment; payments more than 60 days late are delinquent and may lead to cancellation of the guarantee after 30 days' written notice. The reduced B&I fee under 5001.454(d) is available at the lender's request, subject to an annual limit the notice sets (12 per cent of B&I authority in FY2025), for projects in a distressed community on the Economic Innovation Group index, an area of long-term population decline over three censuses, a persistent poverty county, a presidentially declared disaster area within 24 months, a jurisdiction with unemployment at 125 per cent or more of the national rate, tribal land, or projects supporting local and regional food, value-added natural resource products, multi-jurisdictional plans or additional markets for existing local businesses (9)(10)(11)(37).

6.5 Equity

For B&I, 5001.105(d) sets the test. Equity "must be met in the form of either cash or earning assets contributed to the business and reflected on the borrower's balance sheet," cannot include appraisal surplus or bargain purchase gains, and is measured on the balance sheet as of loan closing, "giving effect to the entirety of the loan in the calculation whether or not the loan itself is fully advanced." Subordinated debt counts only when exchanged for cash that remains in the business for the life of the loan (30).

The Agency may increase the requirement for higher-risk loans and may reduce the existing-business minimum where personal or corporate guarantees are obtained and the pro forma ratios meet or exceed the RMA median quartile for the industry. The lender certifies at closing that the requirement was met. CF, WWD and REAP have no equivalent table; REAP requires the 25 per cent borrower contribution, and CF and WWD reward leveraging through priority points rather than mandating an equity percentage (30)(36)(38).

The study's financial section has to show the closing balance sheet that satisfies the applicable row, and the 25 per cent row is the one that catches new-construction sponsors who expect 10 per cent because the SBA programmes ask for it.

6.6 Collateral and appraisal

Under 5001.202(b)(4) all collateral must secure the entire guaranteed loan with equal lien priority for the guaranteed and unguaranteed portions; the lender may not take separate collateral for the two portions or require compensating balances to eliminate its exposure. The regulation sets no fixed discount-factor schedule; the lender "should discount collateral consistent with sound loan-to-discounted value practices," considering type, quality, location, marketability and alternative use, and the basis of valuation (26).

Under 5001.203, real estate over $250,000 requires an appraisal by an independent qualified appraiser under USPAP Standards 1 and 2, generally a State Certified General Appraiser, with a USPAP Standards 3 and 4 review report before closing; construction projects require both as-is and prospective values; appraisals may not be more than one year old; and "If an appraisal is received containing any value attributed to business valuation or as a going concern, the business valuation or going concern value must be deducted from the reconciled market value prior to discounting." Completed appraisals should be submitted with the application; an estimated value may be submitted at filing but must be supported by an acceptable appraisal before the Loan Note Guarantee. Where the Agency takes a real-property lien the appraisal must consider potential effects of hazardous-substance or petroleum release under ASTM standards, which is the regulatory hook for the Phase I environmental site assessment (39). For a side-by-side view across SBA and USDA programmes, see our guide to appraisal requirements by loan programme.

Two consequences for the study. The feasibility study and the appraisal are distinct exercises, and the legacy rule's sentence that "the income approach of an appraisal is not an acceptable feasibility study" still describes the boundary even though Part 5001 does not repeat it. And on special-purpose property, where our appraisal practice allocates value between real estate, equipment and intangibles, the study's stabilised income will be compared to the appraiser's, and the two have to reconcile.

6.7 Guarantees, terms and rates

Under 5001.204, an Agency-approved unsecured guarantee for the full term is required "from any person or entity owning a 20-percent or greater interest or membership in the borrower," at least equal to the guarantor's percentage interest times the guaranteed loan amount; the Agency may require secured guarantees, guarantees from smaller owners and from indirect owners when warranted; and the section "does not apply to passive investors." (40)

Under 5001.402 the term is set by the lender with Agency concurrence on use of funds, useful life of the collateral and repayment ability, and "may not exceed 40 years." The legacy 30-year, 15-year and 7-year maxima by asset class are not in Part 5001; the single rule is useful life capped at 40 years, applied to a blended term where a loan finances more than one asset class. Balloon maturities are not allowed unless required as a servicing action. Where a note provides an interest-only period, interest is paid at least annually and the first full principal and interest payment must commence not more than three years from the note date. Under 5001.401 the rate is negotiated, fixed or variable, may not exceed what the lender charges similar non-guaranteed borrowers, must be tied to a published base rate if variable, and may adjust no more often than quarterly. Default charges, penalty interest and late fees are not covered by the guarantee and cannot be added to a loss claim (41)(42)(43).

A study that amortises over 25 years on a balloon structure, or that assumes the lender's swap fees are guaranteed, has assumed terms the regulation does not permit.

6.8 Priority scoring, and what the study feeds it

Where requests exceed funds, applications are ranked under the programme's point system, and the Agency may set a minimum score by notice; it did so for B&I in FY2024, at 20 points. The study's quantification of jobs, need, energy and leverage is what the lender uses to substantiate the points claimed (44).

6.9 Environmental review and the other conditions

Actions under Part 5001 must comply with the Agency's environmental procedures; 5001.207 and 5001.115(i) reference 7 CFR Part 1970, and USDA's July 2025 interim final rule consolidated the Department's NEPA procedures at 7 CFR Part 1b. Lenders should confirm with the State Office which framework the review is run under on a current file. What has not changed is the sequence: the Agency cannot issue a conditional commitment until the environmental process is complete, the borrower must not have "taken any actions or incurred any obligations with respect to the project that would either limit the range of alternatives to be considered during the Agency's environmental review process or which would have an adverse impact on the environment, such as the initiation of construction," and doing so "could result in project ineligibility." A study whose schedule assumes construction ahead of the environmental clearance is deficient on its schedule alone (45)(46).

The other conditions a guaranteed loan carries: floodplain management under Executive Order 11988; Section 106 historic preservation review; civil rights requirements on service areas and, for CF public-use facilities, on membership; and the Build America, Buy America Act domestic-content requirement for iron, steel, manufactured products and construction materials, certified before the Loan Note Guarantee, with WWD projects also certifying American Iron and Steel compliance (45)(47).

Part 7. The consultant

Part 5001 asks two separate questions of the person who signs the study: is the consultant independent, and is the consultant qualified. Independence means no financial interest in the project and no compensated-agent relationship with both sides of the loan; qualification means "the knowledge, expertise, and experience to perform the specific task required." A third test sits with the Agency: the consultant must be "acceptable to the Agency," a State Office determination made case by case, with no pre-qualified list. Our article on who may prepare a USDA feasibility study takes the three tests in turn; our USDA feasibility study consultant page describes how we satisfy them (17)(23).

The regulation's conflict-of-interest provisions bar the obvious cases. The lender may prepare the CF financial feasibility analysis under 5001.304(a), which expressly allows "a qualified firm or individual who may be the lender"; it may not prepare the mandatory independent study under 5001.304(a)(4)(i) or 5001.306(a)(3)(i), because those require an independent qualified consultant. The borrower's regular accountant, the loan packager and a franchisor with a financial interest fail the independence test. The heavier CF form is confined to CPAs by its attestation standard. An appraiser's income approach is not a feasibility study. The lender's duty under 5001.208 is to report all conflicts of interest to the Agency in writing; the bar itself comes from the definition read with the independence requirement (17)(20)(48).

Two further duties attach to the lender. Under 5001.202 the credit evaluation must include "a written evaluation of the feasibility study, business plan, technical report, and engineering and architectural reports, as applicable," a separate deliverable from the study and from the credit memorandum. And under 5001.6, contracting for services does not relieve the lender of its responsibilities; the lender owns the study's adequacy at loss claim whoever wrote it (26)(49).

Part 8. How the file moves

8.1 From preliminary review to Loan Note Guarantee

The lender executes a Lender's Agreement once under 5001.131; it does not need to be re-executed for each loan. The Agency encourages but does not require a preliminary eligibility review under 5001.302. The lender submits the application to the State Office where the project is located. On a complete application the Agency's published service goal, restated by the Office of the Comptroller of the Currency in its June 2025 review, is a response within 30 to 60 days, unless approval is prevented by a lack of guarantee authority, the public comment period of an environmental assessment, or an outstanding Department of Labor clearance, which 5001.306(a)(1) requires on any B&I loan over $1 million that will increase direct employment by more than 50. Those are service goals, not entitlements (7)(50)(51).

Approval authority is delegated to State Directors up to a state's authority level, with National Office concurrence above it; the $25 million B&I ceiling, the Secretary's non-delegable authority up to $40 million for value-added cooperatives, and policy exceptions such as rural-in-character determinations elevate a file. The conditional commitment under 5001.451 lists the conditions; "If the conditional commitment is not accepted by both the lender and borrower within 60 days, the conditional commitment becomes null and void." At closing under 5001.452 the lender certifies that "There has been neither any material adverse change in the borrower's financial condition nor any other material adverse change in the borrower during the period of time from the Agency's issuance of the conditional commitment to issuance of the loan note guarantee regardless of the cause or causes of the change." A material adverse change between commitment and closing can require the feasibility support to be refreshed. A modification to a complete application is treated as a new application with a new submission date under 5001.303(d), which resets the priority queue (22)(52)(53).

8.2 The funding cycle

Funds are allotted to States for the fiscal year and pooled nationally late in the year; in FY2024 the Agency processed applications meeting the minimum score continuously through 30 August and pooled all remaining state allocations for national competition from 3 September. A file that is complete and scored in the first half of the year competes against its State's allotment; one that arrives after the pooling date competes against the country. When a State's allotment is exhausted, an otherwise approvable file waits, and the regulation is explicit that a response may be delayed by "a lack of guarantee authority." Continuing resolutions distort the cycle: full-year programme levels cannot be apportioned until an appropriation is enacted, so first-quarter commitments are constrained. A continuing resolution carries FY2026 levels into the early part of FY2027, and no FY2027 appropriation had been enacted as of September 2026 (44)(54)(55).

Two structural facts about the Agency bear on timelines in 2026 and 2027. Rural Development lost roughly a third of its staff between January 2025 and mid-2026, and in June 2026 announced the consolidation of loan origination, processing and servicing into a centralised national framework with regional hubs, on the stated ground that current processes had "contributed to inconsistent underwriting and costly delays." Both are reported by the Agency and by national coalitions rather than by regulation, and both mean that State-level review capacity is not what it was when the 30-to-60-day goal was set (56)(57).

Part 9. What actually gets sent back

9.1 The approval record

The one public series on B&I throughput is Table 3 of the Office of the Comptroller of the Currency's June 2025 Community Developments Insights report on the programme, which states that it does not reflect agency policy. The figures are the Agency's.

Submissions grew 44 per cent over three years while approvals fell. The reason visible in the record is budgetary rather than a rise in credit denials: claims-stage denials of the guarantee stayed at or near zero, the programme ran into its authority, and the December 2023 minimum-priority-score notice formalised the rationing. The consequence for a feasibility study is that the study is no longer a formality attached to an approvable deal. It is the document the reviewer reads to decide which of two approvable deals gets the allotment (50)(44).

9.2 The audit record

The richest public account of what the Agency itself considers a deficient study is its auditors'. In 1999 the Government Accountability Office reviewed 24 B&I borrowers on whose loans the Agency had paid losses between FY1994 and FY1998 and found that the Agency "did not follow its own requirements in making guarantees on loans to 18 of the 24 borrowers, thereby contributing to the losses," and that "11 loans were missing feasibility studies ... that Service officials should have obtained, 3 others had feasibility studies with significant flaws, and 4 were questionable, given the business risk and the potential for loss of collateral." The report also recorded that field officials felt "pressure to use all of the loan guarantee authority allocated to their offices." The regulation has changed twice since; the two failure modes the report names, no study where one was required and a study with significant flaws, have not (58).

The USDA Office of Inspector General's B&I work over the following two decades adds the servicing side: covenant and equity conditions in the conditional commitment that were never met, first lien positions never perfected because the State Office relied on the borrower's attorney, and lender servicing deficiencies that produced questioned costs in the millions. No OIG audit dedicated to the OneRD initiative or citing Part 5001 as its subject was located; the Agency's own oversight has been internal. In May 2026 USDA announced that desk audits of high-delinquency lenders had "showed significant findings of non-compliance with the regulatory requirements of the OneRD program," and revoked the approved-lender status of ten lenders whose portfolios held approximately $620 million in delinquent loans, about 47 per cent of Rural Development's total delinquent book. We cite the removal in aggregate; the Agency named the lenders and this handbook does not (59)(60)(61).

The lesson synthesised across the record is consistent. The documented failure modes are: no study where one was required; a study present but with significant flaws or unaddressed components; a CF projection not supported by an examination opinion where the tiering required one; equity, working capital or covenant assumptions that never materialised; and collateral and lien assumptions inconsistent with what was perfected. A study that fails any of these is precisely what the Agency's oversight bodies have historically flagged, and what a purchase reviewer will look for.

9.3 Appeals

Adverse Agency decisions are appealable to the National Appeals Division under 5001.5 and 7 CFR Part 11; a decision affecting only the lender may be appealed by the lender alone, and one affecting the borrower requires a joint request. The Agency's authority to require a study is exercised case by case and is not itself appealable, though the adverse decision that follows is. NAD does not publish individually searchable Director Review decisions on B&I or OneRD guarantees; what exists publicly is the procedural framework and archived disposition statistics. Practitioners who want the adjudication record on feasibility adequacy, consultant acceptability, new-business classification or rural-area eligibility will find it only through a records request to the Office of Hearings and Appeals (62)(63).

9.4 The study at loss claim

Subpart F is where a deficient study becomes money. Section 5001.521(d) provides: "Negligent loan origination and negligent loan servicing will result in a reduction of loss claims payable under the guarantee to the lender if any losses have occurred as the result of such negligence. ... The extent of the reduction, which could be a total reduction of the loss claims payable, will depend on the extent of the losses incurred as a result of the negligent loan origination or servicing." The regulation does not name the feasibility study as a standalone trigger; it routes study failures through the "reasonably prudent lender" standard in the definition of negligent loan origination. Because the study is the core origination artefact for repayment analysis, a study that a prudent lender would not have accepted on its own unguaranteed loan is inside that exposure. The guarantee is also unenforceable or reducible for fraud or misrepresentation, unauthorised use of funds and failure to obtain, perfect or maintain collateral. Before a final loss claim is paid the lender must account for all funds and collateral, the Agency may audit all applicable documentation, and the lender must make its records available; the origination file, study included, has to survive the life of the guarantee (17)(64)(65).

Part 10. The programme in numbers

10.1 Business and Industry volume

The figures below are from an economic assessment of the B&I programme prepared for a rural lenders' association and submitted as witness material to the House Agriculture Committee in September 2025; it is a programme assessment built on Agency loan-level records, not a USDA publication, and we treat it as such.

FY2020 and FY2021 totals include CARES Act lending; core B&I in those years was $1,058 million and $1,807 million. Average guaranteed loan size rose from $2.75 million in FY2015 to $8.1 million in FY2024, the core loan count fell to a decade low in FY2024 while dollars held, and the FY2025 programme level of $3.5 billion was the highest in the programme's history. Over FY2015 to FY2024 the programme obligated $13.4 billion, 60 per cent of it in the last five years, and paid roughly $501.6 million in losses, a lifetime gross loss ratio near 3.7 per cent concentrated in pre-2016 vintages, with average annual losses under $30 million from FY2021 to FY2024 (55)(66).

10.2 Where B&I dollars go

Accommodation and food services, the sector that holds hotels, RV parks and restaurants, has taken roughly a third of B&I dollars in every recent year and nearly $4 billion over the decade. That is the sector in which a new business is most often the borrower, the feasibility study is most often mandatory, and market feasibility is most often the component that decides the file. Our article on rural hotel feasibility under B&I works one of those files through. Over 2015 to 2024 the top states by obligation were North Carolina, Louisiana, Texas, Florida, Oklahoma, California, Arizona, Missouri, Kentucky and Oregon; no single-year state table is published (55)(66).

10.3 FY2026 position and the FY2027 request

Eleven months into FY2026, B&I had obligated under half its authority with half a billion dollars pending, and the CF guaranteed programme had used less than 2 per cent of $650 million. The subsidy rate tells the other half of the story: the B&I rate fell from about 5.1 per cent in FY2015 to 0.2 per cent in FY2025, then the FY2027 Federal Credit Supplement repriced it to 1.09 per cent for FY2026 and 1.93 per cent for FY2027, and carried a B&I commitment level for FY2027 of $85 million against $2.1 billion in FY2026. That figure is a request reflecting a proposed programme reduction, not an enacted level, and the House appropriations bill remained at committee stage in September 2026. A study prepared for a file that will be obligated in FY2027 should be written on the FY2026 parameters until an FY2027 notice publishes, and should not assume that authority at FY2026 levels will be available (67)(68)(69).

Part 11. Writing the study to the regulation

What follows is how our USDA feasibility study service builds a study to Part 5001, and it is offered as a specification a lender can hold any consultant to.

Before scoping. Settle four things with the State Office in writing: the programme and the section that governs the file; whether the borrower is a new business under 5001.3 or, for CF, a new entity or an entity conducting a new activity; whether the study is mandatory or discretionary, and if discretionary, whether it is required; and the scope the Agency will determine. Confirm the rural-area determination at the project address on the 50,000 test. Confirm the fiscal year of obligation and pull the notice for that year.

The executive summary. One page. The project, the programme, the loan, the five determinations in the appendix's order, an overall conclusion on the project's chance of success, and the recommendation. This is the page the State Office reads first and the National Office reads only.

Economic feasibility. Inputs and whether they exist locally; the contracts that secure them with terms and renewals; environmental exposure and the review class; project cost against revenue created; economic impact in the number the priority score uses, with jobs by position and wage against 150 per cent of the federal minimum wage on B&I files.

Market feasibility. A trade area with a stated basis; demand for the right cohort from primary data; competitive supply including the pipeline, physically inventoried; pricing against comparables; captive versus competitive end users; by-product streams; industry risk.

Technical feasibility. Site, entitlement, utilities, infrastructure, labour market, materials; the technology's commercial availability and its success record elsewhere at this scale; construction risk; for REAP, the technical report content the tier requires, and simple payback computed on the regulation's formula.

Financial feasibility. Projections from current statements through at least two years at stabilisation and to the end of the term where the Agency requires it; the assumptions list as a separate schedule; the closing balance sheet showing the equity row that applies; coverage on the regulation's ratio, EBITDA less replacement capital expenditure over principal and interest, globally where affiliates and guarantors are consolidated, against the lender's stated floor; the twelve financial factors addressed by name; a sensitivity section that stresses each assumption the base case depends on and reports the year coverage falls below the floor; for CF, the 90 per cent occupancy cap on residential care and the three named sensitivities; a schedule that does not assume construction ahead of environmental clearance.

Management feasibility. History, background, experience, skills and the qualifications necessary to implement the project; where the operator is new to the asset class, the management agreement.

The recommendation and the qualifications. A signed opinion. The author's résumé and prior experience in the asset class and the programme.

The reconciliations. To the appraisal, on stabilised income and on any allocation between real property and business value; to the lender's credit memorandum, on the coverage floor and the equity test; to the environmental review, on schedule.

The legacy-contamination check. Before delivery, search the draft for the six errors that recur: a 20,000 or 10,000 population threshold applied to a guaranteed loan; a 51 per cent citizenship-ownership test; 30, 15 and 7-year term maxima by asset class; a "3 per cent permanent" guarantee fee or an "80 per cent" guarantee stated as law rather than as the current notice; "tangible balance sheet equity" as if it were a defined term; and a feasibility requirement quoted from 7 CFR 4279.150 or the 2020 text of 5001.306.

Part 12. Where this handbook sits

This is the regulatory spine of our USDA work. For the deliverable itself, its data layer and how we scope it, use the USDA feasibility study service page. For the preparer, independence and acceptability, use the USDA feasibility study consultant page. For the single questions the handbook can only summarise, the insights articles linked above go further: who may prepare a USDA feasibility study, inside a feasibility study engagement, when the study is waived, deficiency letters and what reviewers check, and rural hotel feasibility under B&I. For the parallel SBA framework, SOP 50 10 8 and 8.1 rather than Part 5001, use our SBA feasibility study service page and its own analyses; the two programmes ask for the same five things in different language, and a study written for one is not automatically a study for the other.

To check whether a specific loan needs a study, which other reports the file carries and how each section should be prepared, use the Feasibility Study Methodology Navigator.

For the cross-asset framework, demand regimes, valuation methods and reviewer tests, see the 2026 Feasibility Methodology Atlas.

Frequently asked questions

What is 7 CFR Part 5001? It is the OneRD Guaranteed Loan Regulation, the single USDA Rural Development rule that governs the Business and Industry, Community Facilities, Rural Energy for America and Water and Waste Disposal guaranteed loan programmes. It took effect on 1 October 2020, replaced four separate legacy regulations, and has been amended in 2020, 2021, 2022, 2024 and 2025.

When does USDA require a feasibility study? Under B&I, on any guaranteed loan over $1 million to a new business (5001.306). Under Community Facilities, on any guaranteed loan over $1 million to a new entity or an entity conducting a new activity (5001.304), and every CF loan also needs a financial feasibility report. Under REAP a study is discretionary and limited to renewable energy systems (5001.307). Water and Waste Disposal has no feasibility study requirement. On any file, the Agency may require an independent study where the lender's analysis does not establish a basis for repayment or the project will significantly affect an existing operation (5001.303(c)(4)).

What counts as a new business? A business in operation less than one full year; a business in operation a year or more that has not reached full operational capacity or stable operations as determined by the Administrator; and a new enterprise or new affiliate of an existing business moving or expanding into a new location involving new market or labour areas. An established operator's expansion into a new market can be a new business.

What are the five feasibility factors? Economic, market, technical, financial and management feasibility, as named in the definition at 5001.3 and set out in Appendix A to Subpart D, which lists thirty-seven factors to consider across the five, together with an executive summary, a recommendation and the author's qualifications.

Who may prepare a USDA feasibility study? An independent qualified consultant acceptable to the Agency: an independent third party with the knowledge, expertise and experience for the task, with no financial interest in the project, no compensated-agent relationship with both sides of the loan, and accepted by the State Office case by case. The lender may prepare a CF financial feasibility analysis but not the mandatory independent study.

What is the rural area population limit for a USDA guaranteed loan? 50,000 for all four OneRD guaranteed programmes, under the definition at 5001.3, measured on the latest decennial census and excluding the urbanised area contiguous and adjacent to a city of more than 50,000. The 20,000 and 10,000 figures belong to the Community Facilities and Water and Waste Disposal direct programmes; inside Part 5001 they appear only as priority-scoring and reservation-of-funds thresholds.

What are the FY2026 USDA guarantee percentages and fees? Under the notice at 91 FR 11272, effective 1 October 2025: B&I 85 per cent on loans under $5 million and 80 per cent from $5 million to $25 million, with a 3 per cent guarantee fee and 0.55 per cent retention fee; Community Facilities 80 per cent, 1.25 per cent and 0.50 per cent; REAP 80 per cent, 1 per cent and 0.25 per cent; Water and Waste Disposal 90 per cent, 1 per cent and no retention fee. The rate in effect for the fiscal year of obligation stays for the life of the guarantee.

How much equity does a B&I borrower need? Under 5001.105(d): 10 per cent for an existing business or a new business with adequate sales contracts; 20 per cent for other new businesses; 25 per cent for a new business with construction where the guarantee is issued before completion, each measured on the closing balance sheet giving effect to the full loan, with alternatives expressed as debt-to-equity ratios or a percentage of total eligible project cost.

Does USDA set a minimum debt service coverage ratio? No. Part 5001 defines the ratio at 5001.3, EBITDA less reasonably expected replacement capital expenditure over annual principal and interest, and requires a global coverage analysis in the lender's credit evaluation, but sets no numeric floor except a 1.1x historical ratio where refinancing is the majority purpose of a loan to an existing business. The floor is the lender's.

How long must projections run? From current statements through at least two years of the project at full operational capacity or stable operations, and, at the Agency's discretion, to the end of the loan term, supported by a separate list of assumptions (5001.303(b)(4)(iii)).

What is the maximum term of a USDA guaranteed loan? The justified useful life of the project or collateral, not exceeding 40 years, with no balloon maturity, and any interest-only period ending with a first full principal and interest payment within three years of the note (5001.402).

What happens to a lender if the feasibility study is deficient? Under 5001.521(d), negligent loan origination results in a reduction of the loss claim payable, up to a total reduction, to the extent losses resulted from the negligence. The regulation does not name the study as a standalone trigger; it applies the reasonably prudent lender standard, and the study is the core origination artefact that standard is measured against. The lender remains responsible for the study's adequacy whoever prepared it.

Sources

1. U.S. Department of Agriculture, Rural Development, OneRD Guaranteed Loan Regulation, final rule, 85 FR 42494, 14 July 2020, effective 1 October 2020; correction, 85 FR 62196, 2 October 2020
2. 7 CFR 5001.1, General, and 5001.2, Structure, eCFR, current through September 2026
3. USDA Rural Development, OneRD Guaranteed Loan Initiative stakeholder briefing, July 2020, and OneRD Guaranteed Loan Initiative Lender's Guide
4. Appendix A to Subpart D of 7 CFR Part 5001, Feasibility Study Components, as published at 85 FR 42518 (image) and as reproduced in text in RD Instruction 5001
5. USDA Rural Development, RD Instruction 5001, Procedure Notice 648, 10 July 2025
6. 7 CFR Part 4280, Subpart B, Appendix D, Feasibility Study Components, and preamble at 86 FR 22304, 27 April 2021
7. 7 CFR 5001.306, Specific application requirements for BI projects, as amended at 89 FR 79721, 30 September 2024
8. OneRD Guarantee Loan, final rule, 89 FR 79698, 30 September 2024, effective 29 November 2024; correcting amendments, 89 FR 97477, 9 December 2024; technical correction, 90 FR 57351, 11 December 2025
9. 7 CFR 5001.10, 5001.407, 5001.454, 5001.455 and 5001.456, eCFR
10. USDA Rural Development, OneRD Annual Notice of Guarantee Fee Rates, Periodic Retention Fee Rates, Loan Guarantee Percentage and Fee for Issuance of the Loan Note Guarantee Prior to Construction Completion for Fiscal Year 2026, 91 FR 11272, 9 March 2026, effective 1 October 2025
11. The same notice for Fiscal Year 2025, 89 FR 53041, 25 June 2024, and for Fiscal Year 2024, 88 FR 42909, 5 July 2023
12. USDA Rural Development, Business and Industry and Community Facilities Lender Complete Application Checklists
13. USDA, EPA and HUD interagency Preliminary Engineering Report outline; RUS Bulletin 1780-2
14. 7 CFR 4279.150, Feasibility studies (legacy Business and Industry rule)
15. USDA Rural Development, RD Instruction 4279-B, Appendix E, Guide for Completion of Feasibility Studies, revised 5 October 2016, Procedure Notice 489
16. 7 CFR 1980.442, Feasibility studies (legacy rule)
17. 7 CFR 5001.3, Definitions, eCFR, current through 4 September 2026
18. 7 CFR 3570.53, Community Facilities Grant Program definitions; 7 CFR 1942.17, Community facilities
19. 7 CFR 5001.316 and 5001.317, CF and WWD priority point systems
20. 7 CFR 5001.304, Specific application requirements for CF projects, as amended at 89 FR 79720
21. 7 CFR 5001.307, Specific application requirements for REAP projects, as amended at 89 FR 79721
22. 7 CFR 5001.303, Applications for loan guarantee
23. Practitioner interpretation of State Office administration of the new-business determination, the acceptability of consultants and the discretionary study, as labelled in the text
24. 7 CFR 5001.305, Specific application requirements for WWD projects, as amended at 86 FR 70357 and 89 FR 79720
25. USDA Rural Development, unnumbered letter, Requirements of Financial Feasibility Evaluations for Community Facility Applications, 14 March 2018
26. 7 CFR 5001.202, Lender's credit evaluation
27. 7 CFR 5001.102, Project eligibility, including paragraph (d) on refinancing
28. 7 CFR 4279.261, Section 9003 biorefinery programme application requirements
29. 7 CFR 5001.103, 5001.104, 5001.106, 5001.107 and 5001.108, eligible CF, WWD and REAP projects
30. 7 CFR 5001.105, Eligible BI projects and requirements, including paragraph (d) on equity
31. 7 CFR 5001.126, Borrower eligibility
32. 7 CFR 5001.121 and 5001.122, Eligible and ineligible uses of loan funds
33. 7 CFR 5001.115 and 5001.118, Ineligible projects
34. 7 CFR 5001.127, Borrower ineligibility conditions
35. 7 CFR 5001.141, New Markets Tax Credits Program
36. 7 CFR 5001.406, Guaranteed loan amounts
37. 7 CFR 5001.454(d), Reduced guarantee fee criteria
38. 7 CFR 5001.316(c) and 5001.317(d), leveraging points
39. 7 CFR 5001.203, Appraisals
40. 7 CFR 5001.204, Personal, partnership, and corporate guarantees
41. 7 CFR 5001.402, Term length, loan schedule, and repayment
42. 7 CFR 5001.401, Interest rate provisions
43. 7 CFR 5001.403 and 5001.450, Lender fees and general guarantee provisions
44. USDA Rural Development, Business and Industry Guaranteed Loan Program minimum priority score notice for Fiscal Year 2024, Federal Register, 7 December 2023
45. 7 CFR 5001.207, Environmental responsibilities, and 5001.115(i); 7 CFR Part 1970, Environmental Policies and Procedures
46. USDA, National Environmental Policy Act, interim final rule, 3 July 2025, 7 CFR Part 1b
47. 7 CFR 5001.452 and 5001.458; Build America, Buy America Act, Pub. L. 117-58
48. 7 CFR 5001.208, Conflicts of interest
49. 7 CFR 5001.6, General lender responsibilities
50. Office of the Comptroller of the Currency, Community Developments Insights, USDA Rural Development Business and Industry Guaranteed Loan Program, June 2025
51. 7 CFR 5001.131 and 5001.302
52. 7 CFR 5001.451, Conditional commitment, and Form RD 5001-3
53. 7 CFR 5001.452, Loan closing and conditions precedent to issuance of loan note guarantee
54. Congressional Research Service, Report R48564, Agriculture and Related Agencies: FY2026 Appropriations
55. USDA B&I Guaranteed Loan Program economic assessment prepared for the National Rural Lenders Association and submitted to the House Agriculture Subcommittee on Commodity Markets, Digital Assets, and Rural Development, 18 September 2025 (programme assessment, not a USDA publication)
56. USDA Rural Development, reorganisation announcement consolidating loan origination, processing and servicing, June 2026
57. National Sustainable Agriculture Coalition, analysis of Rural Development staffing, 2026
58. U.S. Government Accountability Office, Rural Development: Rural Business-Cooperative Service Business Loan Losses, RCED-99-249, August 1999
59. USDA Office of Inspector General, Business and Industry programme audits, including Reports 34601-9-Te (November 2001), 34601-14-Te and 34601-4-At
60. USDA Rural Development, OneRD Guaranteed Loan programme page, statement on desk audits of high-delinquency lenders
61. USDA Rural Development, stakeholder announcement on revocation of approved lender status, 13 May 2026, and USDA press release 0065.26, 12 May 2026
62. 7 CFR 5001.5, Appeal and review rights; 7 CFR Part 11, National Appeals Division
63. USDA National Appeals Division, procedural guidance and archived Rural Development disposition summaries
64. 7 CFR 5001.521, Loss calculations and payment
65. 7 CFR 5001.511, Repurchases from holders, and 5001.501, General servicing
66. The economic assessment at source 55, Tables 1, 2 and 5
67. USDA Rural Development, OneRD Guaranteed Loan funding availability table, page updated 31 August 2026
68. Office of Management and Budget, Federal Credit Supplement, Budget of the United States Government, Fiscal Year 2027, 3 April 2026, Table 2
69. House Committee on Appropriations, Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, Fiscal Year 2027, committee print, 2026