USDA Business and Industry loans often require an independent feasibility study. Here is what it must cover and what makes one hold up.
If you are pursuing a USDA Business and Industry loan guarantee, or several other rural financing programs, an independent feasibility study is often not optional. It is a condition of the loan. Understanding what the study has to do saves time and keeps the financing on track.
A loan guarantee puts public money behind a private project, so the program wants independent evidence that the project can repay the debt. The study cannot come from the borrower or from anyone with a stake in the deal. Its whole value to the lender is that it is independent and that it applies a consistent, defensible method.
Programs vary in exactly what they specify, so the study has to be built to the requirements of the specific program and lender, not to a generic template.
A lender's credit committee reads the study with a cold eye, which is the right way to read it. The study that clears review is the one that is independent, traces its numbers to checkable sources, tests the financials against downside conditions, and states plainly what it could not establish. A study that projects easy confidence everywhere raises questions rather than settling them.
The point of the study is to satisfy a skeptical reader who controls the money. Have it prepared by someone who builds for that reader from the start, so the feasibility study moves the loan forward instead of sending it back for more work.
Project Red Team runs this kind of analysis for governments, developers, and businesses across the interior West. Tell us about the project and we will lay out what it takes to answer it, and what it costs.
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