USDA B&I and OneRD Loan Guarantee Closing for Lenders

Last reviewed November 2026

Under USDA's OneRD rule, the guarantee does not attach at closing. It attaches when USDA issues the loan note guarantee, after the lender certifies that every condition has been met. Closing well means planning for that certification from the start.

One rule for four programs

7 CFR part 5001 governs USDA's Business and Industry (B&I), Rural Energy for America (REAP), Community Facilities and Water and Waste Disposal guaranteed loans for complete applications received on or after October 1, 2020. Loans from earlier applications stay under the rules in effect when they were filed, which for B&I means 7 CFR parts 4279 and 4287. Check which rule applies before servicing an older loan.

Lenders apply with Form 5001-1 (loan guarantee request) and sign Form 5001-2 (lender's agreement). Regulated lenders in good standing are generally approved to participate once they enroll in USDA's systems and sign the lender's agreement; other lenders apply for approval under 7 CFR 5001.130.

Know the numbers for the fiscal year

Guarantee percentages and fees are set each fiscal year by Federal Register notice and locked in when the guarantee is obligated. For loans obligated in FY 2026, the standard B&I guarantee was 85% for loans under $5 million and 80% for loans from $5 million to $25 million, with a 3% one-time guarantee fee and a 0.55% annual retention fee. A reduced-fee option carried a 1% fee and an 80% guarantee. Issuing the loan note guarantee before construction is complete adds 0.50%. As of November 15, 2026, USDA had not posted its FY 2027 notice, so confirm current rates before quoting a borrower.

The B&I limit is $25 million per borrower, counting existing B&I guaranteed loans.

Start from the conditional commitment

USDA's conditional commitment lists the conditions the loan must meet, and the lender may not close until all of them are met. Turn the commitment into the closing checklist, line by line, and get any changes approved in writing before closing. Under the OneRD rule, USDA approvals must be in writing and obtained before the action.

What the lender certifies

When it asks for the loan note guarantee, the lender certifies a long list of conditions under 7 CFR 5001.452. These are the ones that most often need work at closing:

Every requirement of the conditional commitment has been met, and the financial criteria have been maintained through issuance.
No major changes in the borrower, project or loan conditions without USDA approval, and no material adverse change in the borrower since the commitment.
The borrower is in good standing and still eligible.
The loan was properly closed and all security interests are, or will be, perfected; lien priorities match the commitment; and no mechanic's or other liens, or threatened suits, affect the collateral.
The borrower has marketable title, backed by title insurance or a title opinion, with any rights-of-way and easements addressed.
Construction is substantially complete and within the approved cost, unless USDA agreed to issue the guarantee before completion.
Loan and equity funds were disbursed for approved purposes, supported by a lender settlement statement, and working capital proceeds are disbursed or properly escrowed.
Required guaranties are signed on USDA-approved forms.
For B&I, the capital or equity requirement is met, shown on a balance sheet as of closing that counts the full loan amount.
No lender officer owns part of or serves as an officer or director of the borrower, and no borrower owner holds more than 5% of the lender.
Environmental mitigation measures from USDA's review are in the loan agreement.
Lender-required insurance is in force.

If the lender cannot give a certification, it must explain why to USDA's satisfaction. Start drafting the certification at commitment, not after closing.

Guaranties under the OneRD rule

Owners of 20% or more of the borrower give unsecured guaranties for the full term, at least equal to their ownership percentage times the guaranteed loan amount, on USDA-approved forms in addition to any lender form. USDA may require more, such as secured guaranties or guaranties from smaller or indirect owners. Passive investors are excluded. The lender may ask for an exception if the borrower's collateral, equity, cash flow and profitability are strong, and USDA decides case by case.

The closing package

Guarantee fee and the guaranteed loan closing report
Copies of each executed note and the collateral documents
The final loan agreement, including every condition USDA imposed
Original, executed USDA-approved guaranty forms
The borrower's closing balance sheet, if required
The lender's certification and settlement statement
Any other document the commitment or the rule requires

USDA then reviews the package and issues the loan note guarantee, which the lender attaches to the note. If the lender later sells the guaranteed portion, the lender, holder and USDA sign an assignment guarantee agreement.

Download the USDA guaranteed loan closing checklist (PDF).

Timing note

USDA announced a pause, beginning Friday, November 20, 2026, at 5 p.m. Eastern, on new B&I applications and servicing requests until a new portal launches in 2027. Check USDA's OneRD Guarantee page for the current status before planning a B&I closing or servicing request.

How KS can help

Kennedy Sutherland LLP has closed USDA Business and Industry guaranteed loans for lenders. The firm prepares lender-side documents for USDA guaranteed loans, reconciles them to the conditional commitment, and helps lenders assemble the closing package and certifications. Fixed-fee quotes are available for SBA and USDA loan closings. Initial consultations for lenders are free. Call 210.259.3885.

This guide is general information for lenders and borrowers, not legal advice. Reading it does not create an attorney-client relationship. SBA, USDA and FSA rules change often, so confirm the current program requirements and the terms of your loan's authorization or commitment before relying on it. Kennedy Sutherland LLP is a private law firm. It is not affiliated with or endorsed by SBA, USDA or FSA.

Sources

Sources checked November 2026.

USDA B&I and OneRD Guaranteed Loans: Closing and the Loan Note Guarantee