USDA Tweaks Fees for Rural Loans—Zzz Alert
Published Date: 3/9/2026
Notice
Summary
Starting October 1, 2025, the USDA’s Rural Development agencies are updating the fees and loan guarantee percentages for their loan programs that help rural businesses, housing, utilities, and energy projects. If you’re applying for these loans in fiscal year 2026, expect new rates for guarantee fees, retention fees, and issuance fees before construction finishes. These changes keep the programs running smoothly and support rural communities with fair costs.
Analyzed Economic Effects
4 provisions identified: 0 benefits, 4 costs, 0 mixed.
Business Loan Guarantee Rates (B&I, REAP)
If you apply for Business & Industry (B&I) or Rural Energy for America Program (REAP) guaranteed loans in Fiscal Year 2026, the fee schedule is: B&I less than $5 million — guarantee fee 3.0%, periodic retention fee 0.55%, loan guarantee percentage 85%, issuance-before-construction fee 0.50%; B&I $5M–$25M — guarantee fee 3.0%, periodic retention fee 0.55%, loan guarantee percentage 80%, issuance fee 0.50%; B&I Reduced Fee — guarantee fee 1.0%, periodic 0.50%, guarantee 80%, issuance fee 0.50%; REAP — guarantee fee 1.0%, periodic retention fee 0.25%, loan guarantee percentage 80%, issuance fee 0.50%. These rates are effective October 1, 2025 and apply when you apply for guaranteed loans under these programs.
Community Facilities and Water Loan Rates (CF, WWD)
If you apply for Community Facilities (CF) or Water and Waste Disposal (WWD) guaranteed loans in Fiscal Year 2026, the fee schedule is: CF — guarantee fee 1.25%, periodic retention fee 0.50%, loan guarantee percentage 80%, issuance-before-construction fee 0.50%; WWD — guarantee fee 1.0%, periodic retention fee N/A, loan guarantee percentage 90%, issuance-before-construction fee 0.50%. These rates are effective October 1, 2025 for guaranteed loans under those programs.
Isolated Alaska B&I Projects: Special Fee Terms
For B&I projects in a high cost, isolated rural area of the State of Alaska that is not connected to a road system, the FY2026 rates are: guarantee fee 1.0%, periodic retention fee 0.50%, loan guarantee percentage 90%, and issuance-before-construction fee 0.50%. These rates are effective October 1, 2025 for guaranteed loans under that special Alaska treatment.
Timing and Calculation of Guarantee Fees
The initial guarantee fee must be paid when the loan note guarantee is issued. The periodic retention fee is paid by the lender once a year and must be paid to keep the guarantee enforceable; for loans where the guarantee is issued between October 1 and December 31, the first periodic retention fee payment is due January 31 of the second year after issuance. The periodic retention fee amount is calculated by multiplying the periodic retention fee rate by the outstanding principal loan balance as of December 31, then multiplying by the percentage of guarantee.
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