USDA Feasibility Study Consultant for B&I, CF and REAP Loans

What a USDA feasibility study consultant does

This page covers USDA Rural Development's guaranteed loans under 7 CFR Part 5001: Business and Industry (B&I) first, then Community Facilities (CF) and the Rural Energy for America Program (REAP). Part 5001 also covers Water and Waste Disposal guaranteed loans [1]. The role in general is set out on our feasibility study consultant overview, and the SBA programs are on our SBA feasibility study consultant page.

A USDA feasibility study consultant is the qualified consultant Part 5001 describes. Under 7 CFR 5001.3, a qualified consultant is an independent third-party person with the knowledge, expertise and experience to perform the specific task required [1]. The task is the feasibility study. The same section defines it as a report, including an opinion or finding, by an independent qualified consultant. It evaluates the economic, market, technical, financial and management feasibility of the project in terms of its expectation for success, as outlined in Appendix A to Subpart D [1].

In practice the consultant measures demand in the trade area, reviews the site, the technology and the cost, and tests management. The consultant builds projections from the current financial statements through at least two years of stable operations. Then the consultant tests the debt service coverage ratio (DSCR) under the Part 5001 definition. The lender files the study with its guarantee application. Where the study is mandatory, the Agency sets its scope by the complexity of the project and the borrower [1]. The study is not an appraisal, carries no opinion of value, is not the lender's credit evaluation, and does not decide eligibility.

What a USDA feasibility study is

A USDA feasibility study is an independent, forward-looking analysis of whether a rural project can generate the cash flow to repay a USDA guaranteed loan. It is built on the five components Part 5001 names. It is needed when the credit decision cannot rest on operating history. Part 5001 defines a new business as one in operation less than one full year. It also counts a business that has operated a year or more but has not achieved full operational capacity or stable operations, including a new enterprise or new affiliate of an existing business moving or expanding into a new location involving new market or labor areas [1]. A study is also needed when the Agency cannot find a basis for repayment in what the lender has filed (7 CFR 5001.303(c)(4)) [1].

It is written for two readers at once. The lender must include a written evaluation of the feasibility study in its credit evaluation under 7 CFR 5001.202(b)(6)(ii) [1]. The Agency then decides under 7 CFR 5001.315(b) whether there is a reasonable assurance of repayment ability, and it will only guarantee loans that are sound [1].

It is not an appraisal and contains no opinion of value. Appraisals are a separate item under 7 CFR 5001.203 [1]. It is not the lender's credit evaluation, which the lender prepares under 5001.202. It is not the Agency's environmental review under 5001.207, although it reports the status of the environmental information. For a renewable energy system or integrated processing equipment, Part 5001 lets the technical report sit in the technical feasibility section of a feasibility study (5001.306(a)(3)(iii) and 5001.307(e)(1)) [1]. It is not a Community Facilities financial feasibility study with examination opinion, which 5001.304(b) requires to follow AICPA attestation standards [1]. It informs a guarantee decision rather than making one, and it says so on page one.

The hard numbers in Part 5001

Part 5001 sets standards more than numbers. The figures below are the ones a USDA study has to work with. Each comes from the rule as published on GovInfo, revised as of January 1, 2026 [1]. The guarantee percentage and the fee rates change each fiscal year; the next section covers them.

Guarantee, fees and loan limits

The guarantee percentage, the guarantee fee rate and the retention fee rate are set by the Agency and published in the Federal Register (7 CFR 5001.407, 5001.454 and 5001.455) [1]. A study states the ones in force when the loan is obligated. Part 5001 fixes the framework they move within.

Guarantee percentage. The maximum guarantee is 90 percent of eligible guaranteed loan loss. The Agency sets a guarantee percentage for each program every year, at or below the maximum allowed by statute, and publishes it in the Federal Register (7 CFR 5001.407) [1].

Guarantee fee. The one-time guarantee fee is the total loan amount times the percentage of guarantee times the fee rate. The rate is set annually but may not exceed 5 percent for B&I, 4 percent for Community Facilities, and 3 percent for REAP and Water and Waste Disposal. The rate in effect when the guarantee is obligated stays in place (7 CFR 5001.454(a) and (b)) [1]. If the loan note guarantee is issued before construction is complete, an additional fee of 0.50 percent is added (5001.454(c)) [1]. The lender may pass the fee on to the borrower, and B&I and Community Facilities loan funds may pay it (5001.454 and 5001.121) [1].

Retention fee. The Agency collects a periodic guarantee retention fee for as long as the loan note guarantee is outstanding. The rate published when the loan is obligated is written into the conditional commitment and stays in effect for the life of the guarantee (7 CFR 5001.455) [1].

Loan limits. Total B&I guaranteed loans to one borrower may not exceed $25 million. The Secretary may approve up to $40 million for rural cooperatives that process value-added agricultural commodities, and a separate guarantor limit of $100 million applies (7 CFR 5001.406(c)) [1]. The per-borrower limit is $100 million for Community Facilities and $50 million for Water and Waste Disposal. A REAP guaranteed loan is at least $5,000 and no more than 75 percent of eligible project costs. The borrower must contribute at least 25 percent, and total REAP guaranteed loans to one borrower may not exceed $25 million (5001.406) [1].

Terms. The lender sets the term with Agency concurrence, based on the use of funds, the useful economic life of the assets and the borrower's repayment ability. The term may not exceed 40 years or the limit in state law, whichever is less. Payments are due at least annually, balloon maturities are not allowed unless required as a servicing action, and the first full principal and interest payment must start within three years of the note (7 CFR 5001.402) [1]. Rates are negotiated between lender and borrower and may be fixed or variable. A variable rate may adjust no more often than quarterly (5001.401) [1].

That is why our studies model debt service on the term, rate and amortization in the lender's term sheet, not on a program maximum. Where the loan finances the guarantee fee, the fee sits inside sources and uses.

When Part 5001 requires a study

The rule is narrower than many sponsors assume. A study is mandatory in two places, and the Agency may ask for one on any file.

Business and Industry. Under 7 CFR 5001.306(a)(3)(i), a guaranteed loan greater than $1,000,000 to a new business requires a feasibility study prepared by an independent qualified consultant acceptable to the Agency. The scope is determined by the Agency and depends on the complexity of the project and the borrower [1]. The new business definition in 5001.3 includes a business in operation for a year or more that has not achieved full operational capacity or stable operations, and a new enterprise or new affiliate of an existing business moving or expanding into a new location involving new market or labor areas [1]. That second clause catches files the first misses, such as an existing operator opening a second location in a new market. At $1,000,000 or less, the Agency may require a study when the lender's analysis or other borrower information is not enough to judge technical feasibility or economic viability. It may also require one when the project will significantly affect the operations and historic cash flow of an existing business (5001.306(a)(3)(ii)) [1].

Community Facilities. Under 7 CFR 5001.304, every CF guaranteed loan needs a financial feasibility report by a qualified firm or individual acceptable to the Agency [1]. The lighter form is a financial feasibility analysis, which the lender may prepare. It applies in three cases: guaranteed loans of $25 million or less to existing community facilities; loans secured by a general obligation bond or other tax-supported income sufficient to pay the debt service for the life of the loan; and borrowers whose audited statements for the last three years show the ability to pay all existing and new debt service (5001.304(a)) [1]. Every other CF loan needs a financial feasibility study with examination opinion, prepared under AICPA attestation standards (5001.304(b)) [1]. Separately, a CF guaranteed loan greater than $1,000,000 to a new entity, or to an entity conducting a new activity, requires a feasibility study by an independent qualified consultant acceptable to the Agency (5001.304(a)(4)(i)) [1]. Projections for assisted living facilities, skilled nursing facilities and similar residential facilities must be based on no more than 90 percent occupancy. Utility projects that depend on user fees must base their forecasts on a mandatory hookup statute or ordinance, or on signed and enforceable user agreements (5001.304) [1].

Every program, at the Agency's discretion. Under 7 CFR 5001.303(c)(4), the Agency may require an independent feasibility study when it cannot determine a basis for successful repayment from the analysis of the five feasibility study components already in the file, or when the project will have significant impacts on existing operations [1]. Under 5001.315(a), it may require the lender to obtain additional assistance where the lender lacks expertise in the type and complexity of the financing or in the borrower's industry [1].

Rural Energy for America Program. Under 7 CFR 5001.307(d), a feasibility study is required for renewable energy system projects only, and only when the lender or the Agency deems it necessary [1]. A technical report is always required, scaled to project cost (5001.307(e)) [1]. Projects of $80,000 or less use the report described in 5001.307(e)(1)(v). Energy efficiency improvements above $80,000 follow Appendix C. Renewable energy systems above $80,000 and below $200,000 follow Appendix D, and those of $200,000 or more follow Appendix E [1]. Appendix C requires an energy audit for energy efficiency projects of $200,000 and greater [1]. Where a study is commissioned, the technical report may sit in its technical feasibility section (5001.307(e)(1)) [1].

Two further rules shape every engagement. Under 7 CFR 5001.208, the lender must report all conflicts of interest to the Agency in writing [1]. That is why the consultant's independence is stated in the certification. And feasibility studies and business plans are an eligible use of B&I guaranteed loan funds (5001.121(c)(10)) [1]. For REAP, feasibility studies completed and acceptable to the Agency are an eligible use, provided no portion was financed by any other Federal or State grant or payment assistance (5001.121(d)(11)) [1].

Who may write it, and who may not

Part 5001 contains no list of approved, preferred or certified feasibility consultants. Its test is the definition. A qualified consultant is an independent third-party person possessing the knowledge, expertise and experience to perform the specific task required (7 CFR 5001.3) [1]. Where the study is mandatory, it must also be acceptable to the Agency (5001.304(a)(4)(i) and 5001.306(a)(3)(i)) [1]. The Agency judges that file by file. It sees the consultant through the report itself and through the lender's written evaluation of the study, which 5001.202(b)(6)(ii) requires in the credit evaluation [1].

The rule is clearer about who fails the test. The borrower and the lender are not third parties. The conflict of interest definition in 5001.3 reaches anyone whose personal, professional or financial interests prevent, or appear to prevent, acting impartially. It names a person acting as a compensated agent of both the borrower and the lender on the same guaranteed loan [1]. A packager whose fee depends on the application, a developer, or an equipment vendor selling into the project all hold interests that can appear to prevent impartiality. An appraisal is a different product. It answers what a property is worth, not whether the project will succeed.

What survives that list is the definition applied plainly. The author is an outside professional with documented experience in the subject industry. The author has no economic connection to the borrower, the lender, the packager, the developer or the vendors. The report states the author's qualifications on its face. And the author is willing to reach a conclusion that may be no.

The five components of a Part 5001 study

Part 5001 names five components: economic, market, technical, financial and management feasibility. They appear in the definition of a feasibility study in 7 CFR 5001.3 and in Appendix A to Subpart D, titled Feasibility Study Components [1]. Each is a finding, not a description. Here is what we put in each, and the rule each one answers.

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. The same facts feed the B&I priority score under 7 CFR 5001.318. Among other criteria, it awards points when the guaranteed loan is less than 60 percent of total project cost, when the industry is not already present in the local community, and when the business creates or saves at least five jobs with an average wage above 150 percent of the Federal minimum wage [1].

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. For a B&I loan above $1 million that will increase direct employment by more than 50 employees, the market finding carries extra weight. Part 5001 makes such a project ineligible if it would raise output where demand is not enough to employ the efficient capacity of existing competitors, unless the assistance will not have an adverse effect on them (5001.118(b)) [1]. The Agency must also send such a project to the Department of Labor for concurrence (5001.306(a)(1)) [1].

Technical feasibility. Site suitability, access and utilities, the technology or process, the construction plan and schedule, the contractor's and engineer's qualifications, and the status of the environmental information under 7 CFR 5001.207. The lender's credit evaluation weighs technical feasibility, including the demonstrated performance of the technology (5001.202(b)(5)(iv)) [1]. For renewable energy systems and integrated processing equipment, the technical report Part 5001 requires can be provided in this section (5001.306(a)(3)(iii)) [1].

Financial feasibility. Part 5001 defines it 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 (7 CFR 5001.3) [1]. Projections run from the current financial statements through at least two years of the project performing at full operational capacity or stable operations. They carry a list of assumptions and a pro forma balance sheet for loan closing, and the Agency may require them through the end of the loan term (5001.303(b)(4)(iii)) [1]. We add a sensitivity analysis to every financial section.

Management feasibility. The sponsor's and the operating team's experience against the demands of the business, named managers, succession and governance. The lender's credit evaluation must cover the historical performance and experience of ownership and management specific to the project and industry, and of any entity managing the project under contract (7 CFR 5001.202(b)(1)) [1]. The study gives the lender the evidence for that finding.

What the Agency looks for

Part 5001 does not publish a reviewer's checklist for feasibility studies. It does set out what the lender's credit evaluation must contain, and a study that cannot support those items will not survive the evaluation.

Under 7 CFR 5001.202(b)(6)(iv), financial projections that deviate from historical performance must be substantiated and documented. The borrower's projections should be consistent with past performance, and increases to revenue, profit margins or profitability must be reasonable and substantiated [1]. Under 5001.202(b)(6)(iii), the lender's spreads must include ratios and comparisons with industry standards [1]. Under 5001.202(b)(2), the lender must make all efforts to ensure adequate working capital, operating capital and reserves, and to structure the debt so the borrower has adequate debt coverage, supported by a cash flow analysis [1]. Under 5001.202(b)(5), the lender considers resource and feedstock supply, purchase and off-take agreements, competition, infrastructure, technology, construction risk, contracts and permits, and the creditworthiness of counterparties [1]. Under 5001.9(c), a tax return is not an acceptable financial statement for a loan guaranteed under Part 5001 [1].

A study built on the sponsor's spreadsheet, a national industry average and three tax returns fails those tests before the reviewer reaches the conclusion. Ours sizes working capital explicitly, tests every contract against the loan term, and documents each projected change from history.

Coverage testing under Part 5001

Part 5001 defines the debt service coverage ratio (DSCR) differently from SBA and from many bank policies. Under 7 CFR 5001.3, the DSCR is earnings before interest, taxes, depreciation and amortization (EBITDA), less reasonably expected replacement capital expenditures, divided by the borrower's annual debt service of principal and interest [1]. The replacement capital deduction is part of the definition.

A worked example shows the effect. Take EBITDA of $670,000 and annual debt service of $500,000. Before the deduction, the DSCR is 1.34x. With $125,000 of reasonably expected replacement capital expenditures, the Part 5001 DSCR is $545,000 divided by $500,000, or 1.09x. Every hotel, car wash and RV park replaces equipment on a cycle, so the deduction matters on each of them.

What the regulation does not contain is a general minimum DSCR. There are two numeric coverage tests, and both concern refinancing. First, 7 CFR 5001.102(d)(4)(iii) applies to loans to existing businesses where debt refinancing is a majority purpose. The borrower must show historical DSCR of not less than 1.1 times at the proposed debt service, or show it has corrected or recovered from past problems with a DSCR of at least 1:1 on the current income statement [1]. Second, 5001.102(d)(5) applies to Community Facilities refinancing of rural hospital debt. It requires a total DSCR of at least 1.1 on historical cash flow, with annual capital expense reserves and debt repayment reserves counted in debt service [1]. Any other minimum belongs to the lender's policy or to the conditional commitment, which states a minimum DSCR when the lender or Part 5001 requires one (5001.451(b)(3)(xi)) [1].

What the regulation does contain is a set of evidence rules around the number. Under 5001.202(a), applications involving affiliates must include a global credit evaluation and, if applicable, a global historical and projected DSCR analysis. Applications with guarantors must include a global DSCR analysis of the guarantors, including their cash flow [1]. Under 5001.202(b)(6)(v) and (vi), seasonal cyclical borrowers need quarterly projected cash flow. Projects with construction, where the lender requests the guarantee before completion, need quarterly cash flow from the current statements through start-up or occupancy [1]. Under 5001.105(d), a B&I borrower must meet one of several capital tests at closing [1]. The balance sheet equity versions are at least 10 percent for an existing business or for a new business with qualifying sales contracts. They rise to 20 percent for other new businesses, and to 25 percent for a new business with construction where the lender will request the guarantee before completion. Subordinated debt counts when it is under a standstill agreement for the life of the loan [1]. Under 5001.202(b)(4)(ii), collateral is discounted under sound loan-to-discounted value practices, and the lender must justify its discounts [1].

Our coverage exhibit for a USDA file shows the DSCR under the Part 5001 definition. Beside it, where the project could go either way, it shows the SBA definition. It includes a replacement capital schedule built from the fixed asset register and year-by-year coverage from the first operating period through two stable years, quarterly wherever seasonality or construction applies. It shows global coverage on documented guarantor cash flow, and a break-even analysis that solves for the revenue decline at which coverage reaches the lender's floor and 1.00x. Our article on the debt service coverage ratio for SBA and USDA loans works the arithmetic, and our SBA DSCR calculator tests the same cash flow under both SOP versions.

The application and review process

Only the lender applies. Under 7 CFR 5001.301, the lender files applications and related documents through its Agency contact. It may begin with a request for a preliminary eligibility review or with a full application [1]. The Agency's written comments on a preliminary review are solely advisory. They do not obligate the Agency to approve the request and are not a favorable or adverse decision (5001.302(b)) [1].

A complete application under 7 CFR 5001.303(b) contains [1]:

• the Agency-approved application form or system;
• the lender's credit evaluation under 5001.202;
• the environmental information the Agency needs for its review;
• a current balance sheet and year-to-date income statement of the borrower and any guarantor, dated within 90 days of submission of the complete application;
• historical statements for the lesser of the last three fiscal years or all years of operation;
• projections through at least two years of stable operations, with assumptions and a pro forma balance sheet for loan closing;
• any known relationship between the borrower and an Agency employee; and
• the lender's loan classification and credit risk rating scale.

Under 5001.303(c), the Agency may also require other items. They include a draft loan agreement for applications of $600,000 or greater, appraisals, credit reports, the feasibility study, engineering and architectural reports, technical reports, and a business plan unless its information is in the feasibility study or the credit evaluation [1]. If an application is incomplete, the Agency tells the lender in writing what is missing (5001.303(a)) [1]. Once a complete application is accepted, any modification is treated as a new application, and the submission date of record becomes the date the Agency receives the modified information (5001.303(d)) [1].

The Agency's determination under 7 CFR 5001.315(b) covers eligibility, a reasonable assurance of repayment ability, sufficiency of collateral and equity, compliance with statutes and regulations, and completion of the environmental review [1]. Eligible applications are scored under the program's priority point system. Applications are considered in the order received, and when requests exceed available funding they are ranked for priority (5001.315(c) and (d)) [1]. Feasibility is not itself a B&I scoring criterion. The study supplies scored inputs, such as jobs, wages and the loan's share of project cost (5001.318), and for REAP the simple payback (5001.319(f)) [1].

A selected application receives a conditional commitment. The lender and the borrower must sign it and return a copy within 60 days. It is effective for one year or for enough time to complete the project before loan closing (5001.451(d) and (e)) [1]. When the Agency is satisfied that the conditions are met and has received the fees and the executed lender's agreement, it issues the loan note guarantee (5001.453(a)) [1]. A borrower that buys real property or equipment, or starts construction, after the complete application is received but before the conditional commitment is issued and accepted does so at its own risk (5001.315(f)) [1].

Part 5001 sets no deadline for the Agency's decision, and we do not promise one. What we can promise is that the study will not be the reason the application is incomplete.

How old the study may be

Part 5001 sets no maximum age for a feasibility study. The discipline comes from the rules around it. The borrower's current balance sheet and year-to-date income statement must be dated within 90 days of submission of the complete application (7 CFR 5001.303(b)(4)(i)) [1]. A study built on stale financials will sit beside fresh statements that may contradict it. A replacement or corrected study filed after the Agency accepts a complete application is a modification under 5001.303(d), and the submission date of record becomes the date the Agency receives it [1]. A study that needs refreshing should be refreshed before filing, not after. Part 5001 does not address reuse across lenders or programs. A reused study must still be specific to the project and site, pass the new lender's written evaluation, and be acceptable to the Agency.

Studies by USDA program

USDA Business and Industry feasibility study. B&I borrowers may be cooperatives, corporations, partnerships or other legal entities operated on a profit or nonprofit basis, Indian tribes, public bodies, or individuals, engaged in or proposing to engage in a business (7 CFR 5001.126(d)) [1]. Eligible projects include tourist and recreation facilities such as hotels, motels, resort trailer parks and campgrounds, and nursing homes and assisted living facilities where constant medical care is provided (5001.105(b)) [1]. Total B&I guaranteed loans to one borrower are limited to $25 million (5001.406(c)), and the term may run to 40 years where the useful life of the assets supports it (5001.402(a)) [1]. The project must be in a rural area, with exceptions for certain cooperative and local foods projects (5001.105(c)) [1]. 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 (5001.3) [1]. The study is mandatory above $1,000,000 for a new business. Our B&I studies put the most work into the market section, and every coverage figure is shown under the Part 5001 definition.

USDA Community Facilities feasibility study. CF guarantees finance essential community facilities. They include health care facilities, such as hospitals and assisted living facilities providing daily living and health care assistance under applicable licensure, and fire, rescue and public safety facilities (7 CFR 5001.103(a)) [1]. CF borrowers are public bodies, federally recognized Indian tribes and nonprofit organizations, and they must certify that they cannot obtain credit elsewhere at reasonable rates and terms (5001.126(b)) [1]. Every CF guarantee needs a financial feasibility report. Loans outside the three lighter cases need a study with examination opinion under AICPA attestation standards (5001.304) [1]. Healthcare files bring their own rules: a 90 percent occupancy ceiling on assisted living and skilled nursing projections (5001.304), and a 1.1 historical DSCR test on rural hospital refinancing with reserves inside debt service (5001.102(d)(5)) [1]. We prepare the independent consultant's feasibility study Part 5001 requires above $1,000,000 for a new entity or new activity. Where an examination opinion is required, we coordinate with the CPA firm delivering it.

USDA REAP feasibility study. REAP guaranteed loans finance renewable energy systems and energy efficiency projects for borrowers that meet the definition of agricultural producer or rural small business (7 CFR 5001.307(a)) [1]. A renewable energy system must be in a rural area unless the borrower is an agricultural producer and the application supports agricultural production, processing or marketing (5001.106(c)) [1]. The loan is at least $5,000 and no more than 75 percent of eligible project costs, with a borrower contribution of at least 25 percent (5001.406(d)) [1]. A technical report is always required. A feasibility study is required for renewable energy systems only when the lender or the Agency deems it necessary (5001.307(d) and (e)) [1]. The technical report's projected financial performance must include investment and production incentives and say whether each is one-time or recurring. Simple payback for a renewable energy system, as Part 5001 defines it, excludes one-time benefits and credits that do not provide annual income, such as tax credits (5001.3 and 5001.307(e)) [1]. Our REAP work is scoped to the guaranteed loan and the technical report.

USDA feasibility studies by asset class

The classes below are common subjects of USDA guaranteed loan studies. Each paragraph states what Part 5001 does to the file and what the study has to prove.

USDA feasibility study for a hotel. Hotels and motels are eligible B&I projects as tourist and recreation facilities. Where an owner lives on site, the pro rata value of the owner's living quarters is deducted from the use of loan proceeds (7 CFR 5001.105(b)(8)) [1]. The study builds demand from the corridor's traffic, the identified demand generators and their visitation, the performance of the competitive set, and the seasonality of the specific market. A hotel with a seasonal swing is shown quarterly, as 5001.202(b)(6)(v) requires for seasonal cyclical borrowers [1]. Revenue is built by segment. The franchise furniture, fixtures and equipment reserve is deducted as replacement capital under the Part 5001 DSCR definition. The equity tier under 5001.105(d) is stated, the environmental information status is reported, and the brand agreement, its term and its property improvement obligations are listed as conditions precedent.

USDA feasibility study for a manufacturing or food processing plant. This is the class where the market and technical sections do the most work. The study identifies the customers, tests offtake and supply contracts against the loan term, and verifies input availability and pricing. It reconciles the technical report that 7 CFR 5001.306(a)(3)(iii) requires for integrated processing equipment and systems with the capacity and ramp-up assumptions in the model [1]. For a new business using integrated processing equipment, the Agency may raise the equity requirement (5001.105(d)(5)(i)) [1]. Replacement capital is built from the equipment schedule and can be the largest deduction in the coverage calculation. Working capital is sized explicitly, because 5001.202(b)(2)(i) requires the lender to make all efforts to ensure it is adequate [1]. Jobs and wages, which drive the economic feasibility finding and B&I priority points, are built from a staffing plan rather than asserted.

USDA feasibility study for assisted living, skilled nursing or a rural hospital. Under B&I, nursing homes and assisted living facilities where constant medical care is provided on site are eligible, and independent living facilities are not (7 CFR 5001.105(b)(20)) [1]. Under Community Facilities, hospitals and assisted living facilities providing daily living and health care assistance under applicable licensure are eligible (5001.103(a)(1)) [1]. The study builds demand from the older population in the drive-time trade area, penetration and income qualification, existing and pipeline beds, and payer mix. On a CF file it respects the 90 percent occupancy ceiling in 5001.304 [1]. For a CF rural hospital refinancing, coverage is shown on historical cash flow with capital and debt reserves inside debt service, the 1.1 test in 5001.102(d)(5) [1]. A certificate of need is filed where Federal or State law requires one (5001.303(c)(12)) [1].

USDA feasibility study for an RV park, campground or outdoor resort. Resort trailer parks and campgrounds operated as commercial enterprises are eligible B&I projects, while residential trailer parks are not (7 CFR 5001.105(b)(8) and 5001.118(a)) [1]. Many RV parks are seasonal, so the study shows cash flow quarterly (5001.202(b)(6)(v)) [1]. Demand comes from drive-time access to the metropolitan markets that supply guests, the destination anchor, and the observed season at competing parks. A park can cover its debt service over a full year and still fall short in its off-season quarters. The working capital or seasonal line that carries it through those quarters is sized from the cumulative cash trough and stated as a condition precedent. Replacement capital for pedestals, roads and bathhouses is deducted under the Part 5001 definition.

USDA feasibility study for a gas station, truck stop or travel center. The study builds fuel volume from state traffic counts on the interchange and the through route, the site's position against the dominant direction of travel, and the pricing of every competing site in the drive radius. It then models fuel margin from regional history and stresses the loan against margin compression. Inside sales are built by category from comparable stores. Underground storage tank age, registration and any open remediation case are reported in the technical section. They bear on the environmental information under 7 CFR 5001.207 and on collateral discounts under 5001.202(b)(4)(ii) [1]. Fuel supply and brand agreements are listed as conditions precedent.

USDA feasibility study for a renewable energy or biogas project. Part 5001 defines an anaerobic digester as a renewable energy system (7 CFR 5001.3) [1]. Energy projects under B&I and REAP are where the technical report and the feasibility study meet. The study reconciles the technical report's production estimate with the revenue model and labels every incentive as one-time or recurring, as 5001.307(e) requires [1]. It tests the offtake or interconnection agreement against the loan term and shows coverage with and without incentives. Where the Agency raises equity under 5001.105(d)(5)(i) for renewable energy systems, the sources and uses page reflects it [1].

USDA feasibility study for self storage and RV and boat storage. The study defines the drive-time trade area, computes existing and post-construction square feet per capita, builds rate from the competitive survey, and models lease-up month by month. Because Part 5001 requires projections through at least two years of stable operations (7 CFR 5001.303(b)(4)(iii)), the model runs at least two years past stabilization [1]. Coverage during lease-up is the credit question, and the interest reserve or working capital that carries it is sized and stated.

SBA or USDA: how the coverage tests differ

The two programs test coverage under different rules, and the choice changes the credit test. SBA is a numbers regime. Under SOP 50 10 8.1, a Standard 7(a) loan (a loan greater than $350,000) needs a DSCR of at least 1.15 on a historical and/or projected cash flow basis, and 1:1 on a global basis [2]. A change of ownership needs 1.25:1 for an initial acquisition or an owner buyout [2]. SBA defines operating cash flow as EBITDA, and the lender may justify additions and subtractions, unfunded capital expenditures among them [2]. SOP 50 10 8.1 took effect on October 1, 2026. In SBA's words, it applies "to all applications that are issued an SBA loan number on or after that date," and SOP 50 10 8 continues to govern applications submitted through September 30, 2026 [3].

USDA is a standards regime. It has no general DSCR minimum, a definition that deducts replacement capital, projections through two stable years, quarterly cash flow for seasonal borrowers, tax returns excluded as financial statements, and a $25 million B&I borrower limit [1]. A project that clears SBA's floor can look thin under USDA's definition. When the lender has not yet chosen, we write the coverage exhibit under both definitions so the file can go either way without a rewrite. The SBA side is set out on our SBA feasibility study consultant page, and our SBA DSCR calculator tests it under both SOP versions. Our article on the debt service coverage ratio for SBA and USDA loans works through the differences with examples, and our guide to SBA and USDA financing by asset class compares the programs property type by property type.

How the evidence enters your study

The loan file is the frame, not the study. Around it, every engagement builds the evidence the reviewer has to weigh.

Demand from primary data. A rural trade area defined by drive time and defended in writing. Demand is built on the accepted method for the asset class from traffic counts, demographics, visitation records, registrations, contracts and a measured competitive inventory, with the arithmetic shown.

Contracts tested. Every offtake, supply, franchise and management agreement is read against the loan term, because the lender's credit evaluation must review them and the conditions it weighs include the strength and duration of purchase agreements (7 CFR 5001.202(a) and (b)(5)) [1].

A model built for audit. Projections run from the current financial statements through two years of stable operations, and to the end of the loan term where the Agency asks. They run monthly through ramp-up and quarterly wherever seasonality or construction applies. No calculation cell holds a hardcoded value, and every input is sourced. Coverage is tested under the Part 5001 definition and the lender's policy floor, operating and global, before and after replacement capital, under sensitivity and rate stress.

Conditions named. Whatever the deal still needs, such as an executed offtake contract, a franchise agreement, a permit, a named manager or the environmental determination, is listed with its curing document. That list becomes the conditional commitment checklist.

The components of a USDA feasibility study

A study that survives the lender's credit committee and the Agency's review under 7 CFR 5001.315 is built from a fixed set of components [1]. Each appears in every USDA feasibility study we deliver, in this order, with the arithmetic visible. The framework behind the sequence is on our bankable feasibility study framework page. The documents we ask you to gather before drafting starts are in our feasibility study document checklist.

1. Executive conclusion. The finding on page one: feasible, feasible subject to named conditions, or not feasible as proposed. It gives the projected operating and global DSCR under the Part 5001 definition for each year through stable operations and across the loan term, against the lender's policy floor, and the three or four facts on which the conclusion turns.

2. Project description, sources and uses. The project as it will be financed: site, program, capacity, total project cost by line, the guaranteed loan, any other debt, and the borrower's equity reconciled to the 7 CFR 5001.105(d) test that applies. Eligible and ineligible uses of loan funds under 5001.121 and 5001.122 are identified [1].

3. Program fit. Rural area eligibility under the Part 5001 definition, the program the project fits and why, and the guarantee percentage and fee rates published for the fiscal year.

4. Trade area definition. The geography from which the project will draw its customers, defined by drive time, traffic pattern, physical barriers and observed competitor draw, and defended in writing.

5. Market feasibility. Demand built on the accepted method for the asset class from primary data, shown as arithmetic, with pricing tested against the market and the customer base identified.

6. Competitive supply inventory. Every competing facility in the trade area, physically or remotely inspected, with capacity, rate, occupancy where observable, condition and pipeline.

7. Technical feasibility. Site, access, utilities, zoning and entitlement, the technology or process, the construction plan and schedule, the contractor's and engineer's qualifications, the status of the environmental information under 5001.207, and, for processing and energy projects, reconciliation with the technical report Part 5001 requires.

8. Cost validation. Hard cost, soft cost, equipment, working capital, contingency and interest reserve tested against comparable projects and contractor estimates, with working capital sized explicitly.

9. Management feasibility. The sponsor's and the operating team's experience against the demands of the business, named managers, and succession.

10. Economic feasibility. Jobs created and saved, wages, the community need, and the inputs to the priority score under 5001.318.

11. Financial projections. From the current financial statements through at least two years of stable operations, and to the end of the loan term where required. Monthly through ramp-up and quarterly wherever seasonality or construction applies, with no hardcoded value in any calculation cell, every assumption listed, and a replacement capital schedule built from the fixed asset register.

12. Debt service coverage testing. DSCR under the Part 5001 definition, year by year and quarter by quarter where required, operating and global, against the lender's policy floor and the regulation's own refinancing tests, with the SBA definition shown alongside where the project may go either way.

13. Sensitivity analysis. Single-variable sensitivities on volume, price, cost and interest rate, a combined downside case, and a break-even analysis that solves for the revenue decline and occupancy at which coverage reaches the policy floor and 1.00x. Where the file warrants it, a simulation reports the probability that coverage falls below threshold in any year.

14. Conditions precedent. Every open item the conclusion depends on, listed with its curing document.

15. Certification, independence and sources appendix. The intended users named, the consultant's independence stated so the lender can report any conflict under 5001.208, the limits of the work, a plain statement that the study is not an appraisal and contains no opinion of value, and a sources appendix that lets any reviewer reproduce any number.

A note on coverage ratios

A study that quotes one DSCR, such as 1.25x, as the USDA standard for every file is quoting a lender policy, not the rule. Part 5001 contains a definition that deducts replacement capital expenditures before dividing by debt service, two 1.1 tests that apply only to refinancing, and a requirement that the lender structure the debt so the borrower has adequate debt coverage (7 CFR 5001.3, 5001.102(d) and 5001.202(b)(2)(ii)) [1]. Lender policies vary. A universal ratio is often computed under the SBA definition rather than the USDA one. We ask for the term sheet first and compute coverage under the definition the Agency will read. We show it year by year and quarter by quarter, before and after replacement capital, against the floor your file will actually be measured against.

The acceptability checklist

Before engaging any consultant for a USDA file, confirm ten things. They compress this page into the questions the reviewer will effectively ask. Our USDA feasibility study checklist generator turns them into a scoping list for your project. Our guide to evaluating a feasibility study consultant applies the same tests to any firm you are considering.

1. The author is a third party: no ownership, employment, fee or family connection to the borrower, and no role as the file's packager, broker, developer or vendor.
2. The author is not a compensated agent of both the borrower and the lender on the same loan, which Part 5001 names as a conflict of interest [1].
3. The author's qualifications and experience in the subject industry will be stated in the report itself.
4. The engagement letter promises an opinion: feasible, not feasible, or feasible subject to stated conditions.
5. The scope covers all five components at the depth the project warrants and has been discussed with the lender before drafting.
6. The financial section includes a sensitivity analysis, and every projection carries its assumptions.
7. The study is specific to this project and this site, not adapted from another engagement.
8. For Community Facilities residential projects, projections respect the 90 percent occupancy cap. For user-fee utilities, forecasts rest on a hookup statute or ordinance or on signed user agreements [1].
9. The study will be final before the application is submitted, with lender comments resolved in draft.
10. The completion date, and the financial statements beside it, will be current when the file goes in.

A consultant who hesitates on any of these is telling you how the Agency's review will go.

Model studies: the standard applied

The quickest way to see what an acceptable study looks like is to read one. The model studies below are full feasibility studies in the format we use for USDA files. Each is modeled as a Business and Industry guaranteed loan to a new business above the $1,000,000 line, where Part 5001 makes the independent study mandatory [1]. Each works through the full sequence this page describes: the rural area determination, the five components, the competitor census, the cost estimate and loan sizing, coverage under the Part 5001 definition, the sensitivity analysis, and a signed determination.

For shorter worked examples of the same standard, see our case studies on hotel competitive-set analysis, gas station fuel volume and inside-sales margin, RV park seasonality and coverage timing and self-storage lease-up absorption, and the full case study index.

HOTEL · USDA B&I MODEL STUDY
Upper-Midscale Hotel, Interstate 85 Outlet Pad, Cherokee County, South Carolina
A new hotel at an interstate interchange next to a recently built competitor: how the study positions it against that competitor, and how the sponsor's equity is tested against the 20 and 25 percent tiers for a new business.

TRUCK STOP · USDA B&I MODEL STUDY
New Travel Center, Interstate 10 Interchange, Chambers County, Texas
A hard corner between chain truck stop clusters, where demand is strong and fuel margin is the credit question: why trailing margins from a strong year cannot simply be projected forward, and how a feasibility opinion handles a floodplain condition.

What you receive

A complete analytical report organized around the five Part 5001 components. It has the conclusion on page one, program fit, market and demand analysis with the arithmetic visible, competitive supply inventoried, and a technical and site review with environmental status. It covers management and economic feasibility, full projections and a stress battery under the Part 5001 DSCR definition, itemized conditions precedent, a sources appendix, and a certification stating independence and that the study is not an appraisal. You also receive the fully linked model. Reviewer support through the conditional commitment and closing is included in the fee: when the Agency has a question months later, we answer it.

The engagement

One. Send the project, program, lender and deadline. You receive a written scope and a fixed fee before any work starts, with a lender call if you want one.

Two. A document request tailored to the deal follows: term sheet, budget and sources and uses, site plan, plans or contractor estimate, resumes, financial statements (not tax returns) where the business exists, contracts and offtake agreements, franchise or operating agreements, the technical report where one exists, and the environmental information the lender has assembled.

Three. Market and technical analysis.

Four. Model, stress tests, reconciliation, and a check against Part 5001 and the lender's checklist before anything is delivered.

Five. Delivery and reviewer support through the conditional commitment and closing.

Independence, and what this document is not

The fee is fixed before work begins, never a percentage of the project, never contingent on the finding, and a conclusion is never revised under pressure. The consultant is independent of the lender, the borrower and the project, and says so in the certification so the lender can make its conflict of interest report under 7 CFR 5001.208 [1]. The study names its intended users and is written for them even when the borrower pays. It is not an appraisal, contains no opinion of value, is not prepared under USPAP, and cannot satisfy an appraisal requirement. It is not the lender's credit evaluation, not the environmental review, and not a Community Facilities financial feasibility study with examination opinion. It does not determine eligibility, which rests with the lender and the Agency. It informs a guarantee decision rather than making one. All of this appears on page one of every study we sign.

Who prepares your study

Every USDA study is prepared under, and signed by, Sarrah Allen, MAI. Feasibility Study Consultant prepares independent, lender-facing feasibility studies for USDA and SBA guaranteed loans and for conventionally financed projects.

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.