USDA B&I Guarantee Terms for FY2026: The 85 Percent Tier, Fees, and the Correct Effective Date

The fiscal year 2026 OneRD annual notice, published in the Federal Register on March 9, 2026 as 91 FR 11272, sets the terms that govern every guaranteed loan obligated this fiscal year. For Business and Industry loans under $5 million, the guarantee is 85 percent with a 3.0 percent upfront guarantee fee and a 0.55 percent annual retention fee. For B&I loans of $5 million to $25 million, the guarantee is 80 percent at the same fees. Qualifying reduced-fee projects pay a 1.0 percent upfront fee with a 0.50 percent retention fee at an 80 percent guarantee. REAP loans carry a 1.0 percent fee, a 0.25 percent retention fee, and an 80 percent guarantee. Community Facilities loans carry a 1.25 percent fee, a 0.50 percent retention fee, and an 80 percent guarantee.

The effective date deserves its own paragraph because secondary sources disagree. The notice's DATES section states the fees are effective October 1, 2025, applying to all guaranteed loans obligated in fiscal year 2026. A spring 2026 date that circulated from agency web postings is not the controlling date; the Federal Register text is. Any loan obligated since the start of the fiscal year sits under this schedule.

Size-based tiering is new for FY2026, and the boundary changes lender behavior. On a $4.9 million loan at an 85 percent guarantee, the lender's unguaranteed exposure is $735,000. On a $5.1 million loan at 80 percent, it is $1,020,000, roughly 39 percent more retained risk for 4 percent more loan. Credit committees feel that step. In practice, well-documented projects under $5 million now clear more easily than at any recent point in the program, while projects just above the line draw sharper questions about debt sizing and coverage.

For sponsors near the threshold, the feasibility study should address the sizing question directly: whether the project genuinely requires the amount above the line, or whether scope, phasing, or equity can structure it below. Phased asset classes feel this most; a distillery adding rick houses in stages, for example, can often keep each phase inside the 85 percent tier, a dynamic covered on our Kentucky distillery and brewery page.

The upfront fee drops from 3.0 percent to 1.0 percent for projects located in a persistent poverty county, a designated distressed community, an area of long-term population decline, or a presidential disaster designation. Qualification is geographic and verifiable before application. The savings are material on mid-size loans, and the designations concentrate exactly where the program intends capital to flow: 19 of Alabama's 24 Black Belt counties hold persistent poverty status, detailed on our Alabama page, and distressed designations cover several Pennsylvania Wilds counties noted on our Pennsylvania page.

The states feel the new tier differently because their loan mixes differ. Michigan's program runs on accommodation, with an officially published 58.57 percent of B&I dollars flowing to that sector, profiled on our Michigan page, and small lodging deals are classic sub-$5 million credits. Alabama's officially published mix leads with manufacturing at 26.93 percent, where projects more often exceed the line. Reading your project against your state's documented mix is the first step in setting expectations for review.