Feasibility Study Consultant

    Loan Programs · USDA

    USDA Loan Feasibility Studies: What B&I, CF and REAP Require

    By Sarrah Allen, MAI, Principal · Updated

    This page is for rural borrowers and their lenders who need to know what a USDA guaranteed loan asks of a feasibility study before they commission one. 7 CFR Part 5001 governs four guaranteed loan programs: Community Facilities, Water and Waste Disposal, Business and Industry, and the Rural Energy for America Program [1]. It requires an independent feasibility study for a B&I loan above $1,000,000 to a new business and for a CF loan above $1,000,000 to a new entity or new activity, and it lets the Agency ask for one on any file [1]. The study covers five components, economic, market, technical, financial and management feasibility, and ends in an opinion on whether the project is expected to succeed [1]. The lender files it and must evaluate it in writing, and the Agency judges whether it is acceptable [1].

    See our USDA feasibility study service

    The USDA feasibility study consultant page sets out who may prepare the study, how its coverage test works, and how to request a proposal. Two model B&I studies show the work: a travel center in Winnie, Texas and a hotel in Gaffney, South Carolina.

    Side by side with SBA and bank regulators: feasibility study requirements for lenders. Rates, DSCR margin and stress testing: SBA and USDA loans in 2026, DSCR and interest rates.

    Checked against 7 CFR Part 5001 as published on GovInfo, revised as of January 1, 2026 [1] · Orientation level · Sources are listed at the end of the page

    When It's Required

    USDA programs that require feasibility studies.

    7 CFR Part 5001 governs four USDA guaranteed loan programs: Community Facilities (CF), Water and Waste Disposal (WWD), Business and Industry (B&I) and the Rural Energy for America Program (REAP). It applies to complete applications the Agency receives on or after October 1, 2020 [1].

    B&I requires a feasibility study for a guaranteed loan greater than $1,000,000 to a new business. Part 5001's new business definition includes a business that has not reached full operational capacity or stable operations, and a new enterprise or affiliate expanding into a new location involving new market or labor areas [1]. Community Facilities requires a financial feasibility report on every guarantee. Depending on loan size, security and the borrower's audited history, that report is a financial feasibility analysis the lender may prepare or a financial feasibility study with examination opinion under AICPA attestation standards. A CF loan above $1,000,000 to a new entity or new activity also requires an independent feasibility study [1]. REAP requires a technical report scaled to project cost, and a feasibility study for renewable energy systems only when the lender or the Agency deems it necessary [1].

    The CFR text, revised as of January 1, 2026, shows amendments made on September 30, 2024 and December 11, 2025 (90 FR 57351) [1]. A study should cite the rule as it stands when the application is filed.

    The four Part 5001 programs

    • B&I

      Business and Industry

      Rural business projects. Total B&I guaranteed loans to one borrower are limited to $25 million, or up to $40 million for qualifying rural value-added cooperatives with the Secretary's approval [1].

    • CF

      Community Facilities

      Essential community facilities for public bodies, Indian tribes and nonprofit organizations, including health care, public safety and educational facilities. Limited to $100 million per borrower [1].

    • REAP

      Rural Energy for America Program

      Renewable energy systems and energy efficiency projects for agricultural producers and rural small businesses. At least $5,000, no more than 75 percent of eligible project costs, and up to $25 million per borrower [1].

    • WWD

      Water and Waste Disposal

      Drinking water, sanitary sewage, solid waste and stormwater facilities for a public purpose. Limited to $50 million per borrower [1].

    The Framework

    The five-component USDA feasibility framework.

    Part 5001 names five components in its definition of a feasibility study at 7 CFR 5001.3 and in Appendix A to Subpart D, titled Feasibility Study Components [1]. The depth of each component adapts to the program (B&I, CF, REAP) and the project; the components themselves do not. What we put in each, and the rule each one answers, is set out on the consultant page: USDA feasibility study consultant.

    01

    Economic feasibility

    The project's effect on the rural community: jobs created and saved, wages, the local supply chain and the community's need for the facility. For B&I, the same facts feed the priority score under 7 CFR 5001.318 [1].

    02

    Market feasibility

    Demand measured from primary data for the trade area the project will actually serve, competing supply inventoried, pricing tested against the market, and the customer base identified.

    03

    Technical feasibility

    Site, technology or process, construction plan and the status of the environmental information. For renewable energy systems and integrated processing equipment, the required technical report can sit in this section [1].

    04

    Financial feasibility

    Projections from the current statements through at least two years of stable operations, with assumptions and a pro forma closing balance sheet, and the DSCR under the Part 5001 definition, which deducts replacement capital [1]. We add sensitivity and stress testing.

    05

    Management feasibility

    The experience of ownership and management specific to the project and industry, which the lender's credit evaluation must cover [1]. We give it the most depth when the operator is new to the industry.

    Program Differences

    B&I vs CF vs REAP: how the rules differ.

    The five components apply across all three programs, but the limits, fees and report triggers differ. Every cell in the matrix below comes from 7 CFR Part 5001 [1].

    DimensionB&ICFREAP
    Borrower typeCooperatives, corporations, partnerships and other entities, Indian tribes, public bodies and individualsPublic bodies, Indian tribes and nonprofit organizationsAgricultural producers and rural small businesses
    Loan limit per borrower$25 million; up to $40 million for qualifying rural value-added cooperatives$100 millionAt least $5,000; no more than 75 percent of eligible project costs and $25 million
    Guarantee percentageSet annually; maximum 90 percent of eligible lossSet annually; maximum 90 percent of eligible lossSet annually; maximum 90 percent of eligible loss
    Maximum guarantee fee rate5 percent4 percent3 percent
    Mandatory feasibility studyLoans above $1,000,000 to a new businessLoans above $1,000,000 to a new entity or new activityRenewable energy systems, when the lender or the Agency deems it necessary
    Other required reportTechnical report for renewable energy systems and integrated processing equipmentFinancial feasibility report on every guaranteeTechnical report on every project, scaled to project cost

    Sources: 7 CFR 5001.126, 5001.304, 5001.306, 5001.307, 5001.406, 5001.407 and 5001.454 [1]. The guarantee percentage and fee rates for each fiscal year are published in the Federal Register within these limits, and an additional 0.50 percent guarantee fee applies if the loan note guarantee is issued before construction is complete [1].

    Eligibility

    Rural area definition and the eligibility test.

    Rural area thresholds by program

    • B&I

      Rural area under Part 5001

      Not in a city or town of more than 50,000 inhabitants or its contiguous and adjacent urbanized area, with listed exceptions. Certain cooperative and local foods projects may be in non-rural areas [1].

    • CF

      Rural area under Part 5001

      The same rural area definition applies. Utility projects serving both rural and non-rural areas may qualify regardless of project location [1].

    • REAP

      Rural area, with an agricultural producer exception

      A renewable energy system must be in a rural area unless the borrower is an agricultural producer and the project supports agricultural production, processing or marketing [1].

    Part 5001 points to USDA's Property Eligibility Map for areas excluded as contiguous and adjacent to an urbanized area [1].

    USDA program eligibility starts with location. Part 5001 defines a rural area as any area of a State not in a city or town with more than 50,000 inhabitants and not in the urbanized area contiguous and adjacent to such a city or town. It lists exceptions, including areas the Under Secretary determines to be rural in character [1]. Applications cannot be approved subject to meeting the rural area requirement, so sponsors should confirm eligibility before paying for a study [1].

    Part 5001 sets no maximum age for the study itself. The borrower's current balance sheet and year-to-date income statement must be dated within 90 days of submission of the complete application, and a study replaced after the Agency accepts the application is a modification that resets the submission date of record [1]. A study should be current at filing, and a stale study refreshed before submission, not after.

    Our USDA scope confirms rural area eligibility before the engagement letter is signed and includes the dated eligibility map output as an exhibit.

    Asset class feasibility study pages: Multifamily · Senior Housing · RV Park · Gas Station · Daycare · Brewery · Wedding Venue

    Cross-Program Scope

    When one study must satisfy USDA and the lender, or SBA.

    On a USDA guaranteed loan the lender makes and services the loan, and the Agency guarantees a percentage of it [1]. The lender's credit evaluation must follow prudent lending practice and the lender's own policies, and it must include a written evaluation of the feasibility study [1]. A single study therefore has to satisfy the lender's policy and Part 5001 at once.

    Some projects could be financed under SBA instead, and the coverage tests differ. SOP 50 10 8.1 requires a DSCR of at least 1.15 for a Standard 7(a) loan and defines operating cash flow as EBITDA [2]. Part 5001 deducts reasonably expected replacement capital inside its DSCR definition and sets no general minimum [1]. SOP 50 10 8.1 applies to applications issued an SBA loan number on or after October 1, 2026 [3]. A study scoped to both programs shows coverage under both definitions, so the file can move without a rewrite.

    Read the USDA vs conventional financing comparison →

    FREQUENTLY ASKED

    USDA feasibility study questions.

    Business and Industry and Community Facilities require one above $1,000,000 in two cases: a B&I loan to a new business, and a CF loan to a new entity or an entity conducting a new activity [1]. Every CF guarantee also needs a financial feasibility report, from a financial feasibility analysis the lender may prepare up to a study with examination opinion under AICPA attestation standards [1]. REAP requires a technical report on every project and a feasibility study for renewable energy systems only when the lender or the Agency deems it necessary [1]. The Agency may require a study on any file where it cannot determine a basis for successful repayment [1]. Who may prepare the study is covered on our USDA feasibility study consultant page.

    The five components are economic, market, technical, financial and management feasibility. They appear in the definition of a feasibility study at 7 CFR 5001.3 and in Appendix A to Subpart D, titled Feasibility Study Components [1]. Part 5001 defines financial feasibility as 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 [1]. The depth of each component adapts to the program and the project; the components themselves do not change.

    7 CFR Part 5001 sets no general minimum DSCR. It defines the ratio as EBITDA less reasonably expected replacement capital expenditures, divided by annual principal and interest [1]. Its numeric tests apply to refinancing: 1.1 on historical cash flow, or 1:1 on the current income statement to show recovery, for existing businesses where refinancing is the majority purpose of the loan, and 1.1 on historical cash flow for CF rural hospital refinancing [1]. Any other floor comes from the lender's policy or from the conditional commitment [1]. A defensible study shows coverage holding across sensitivity cases for revenue, expense and rate, not just at the base case.

    The binding recency rule is on the financial statements: the current balance sheet and year-to-date income statement of the borrower and any guarantor must be dated within 90 days of submission of the complete application [1]. Part 5001 sets no maximum age for the study itself. A study replaced after the Agency accepts a complete application is a modification, and the submission date of record becomes the date the Agency receives it [1]. Refresh before filing, not after.

    Part 5001 defines a rural area as any area of a State not in a city or town of more than 50,000 inhabitants and not in the urbanized area contiguous and adjacent to such a city or town, with listed exceptions, and it points to USDA's Property Eligibility Map [1]. B&I and CF projects must be in a rural area, with exceptions for certain cooperative, local foods and utility projects [1]. A REAP renewable energy system must be in a rural area unless the borrower is an agricultural producer and the project supports agricultural production, processing or marketing [1]. Applications cannot be approved subject to meeting the rural area requirement, so confirm eligibility before commissioning the study [1].

    They answer different questions. A business plan is the borrower's own plan for how the project will operate, and Part 5001 does not require one when its information is in the feasibility study or the credit evaluation [1]. An appraisal establishes the market value of collateral under 7 CFR 5001.203 [1]. A market study measures demand and supply in the trade area. A USDA feasibility study is the independent third-party analysis of the five components, and it ends in an opinion on the project's expectation for success [1]. The study and the appraisal are separate deliverables. Feasibility studies are an eligible use of B&I loan funds, and of REAP loan funds when no other Federal or State grant or payment assistance paid for them [1]. Who may prepare the study is covered on our USDA feasibility study consultant page.

    Yes, if it is scoped for both. On a USDA guaranteed loan the lender makes and services the loan and the Agency guarantees a percentage of it, so the study must meet the lender's own policy and Part 5001 at once [1]. Where the project could go to SBA instead, the coverage exhibit can be written under both definitions: SOP 50 10 8.1 defines operating cash flow as EBITDA, while Part 5001 deducts reasonably expected replacement capital inside its definition [1][2].

    Sources

    1. U.S. Department of Agriculture, Rural Development. "7 CFR Part 5001, Guaranteed Loans." Code of Federal Regulations, Title 7, Volume 15, revised as of January 1, 2026. GovInfo. https://www.govinfo.gov/content/pkg/CFR-2026-title7-vol15/xml/CFR-2026-title7-vol15-part5001.xml
    2. U.S. Small Business Administration. "SOP 50 10 8.1, Lender and Development Company Loan Programs." Effective October 1, 2026. https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs
    3. U.S. Small Business Administration. "Information Notice 5000-880695: Issuance of SOP 50 10 8.1." Published August 14, 2026; effective October 1, 2026.

    Get a feasibility study scoped for USDA.

    For a USDA guaranteed loan, or a project that could go to USDA or SBA. The consultant page sets out the service and how to request a proposal.

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