Written: November 4, 2024 | Updated: May 1, 2025
With the Federal Reserve recently lowering interest rates in fall 2024 — the first decrease in four years — and again in December 2024, businesses nationwide could improve their financial standing through refinancing, which had been a less favorable option in recent years. The market is anticipating at least two more 25bps rate cuts in 2025, allowing businesses nationwide to refinance debt at lower interest rates. Two particularly attractive options for business owners to consider are the USDA OneRD Guarantee Loan Program and the SBA 7(a) Loan Program.
Why? Veritex Bank Government Lending offers and prefers variable rates that are adjusted quarterly.
Let’s explore why now might be the perfect time to make this strategic financial move and understand the current lending landscape. In September 2024, the Fed announced a 50-basis-point rate cut, signaling what is perceived to be a new downward trajectory for U.S. interest rates. This proved true in November 2024 with 25-basis-point cut, followed by a third in December 2024. Under the new administration, the market is signaling more to come.
With interest rates trending downward, refinancing current debt potentially allows businesses to lower their monthly payments and improve cash flow. They may also qualify for more favorable terms compared to when they originally borrowed. For example, if a business is stuck with a fixed-rate loan, there is no better time to lock in a variable rate.
Business owners may even consider reinvesting their savings into growth initiatives — from inventory purchases and marketing initiatives to hiring new employees or making equipment upgrades. Refinancing also allows businesses to consolidate multiple debt payments into a single, manageable loan.
The USDA Rural Development (USDA OneRD) Loan Program includes four government-guaranteed loan options earmarked for rural businesses. Veritex Bank Government Lending, a multi-state lender, actively lends through three of these programs: USDA Rural Energy for America Program (USDA REAP), USDA Community Facilities (USDA CF), and USDA Business & Industry (USDA B&I).
For businesses looking to refinance, the USDA Business & Industry Loan is the most versatile of the programs, as USDA REAP and USDA CF Loans come with more specific eligibility requirements.
A USDA B&I Loan provides funding to a wide range of industries, including hospitality, food production, entertainment, manufacturing, healthcare, commercial real estate, restaurant and retail, and more. Veritex Bank Government Lending participates in USDA B&I lending with loans starting at $2 million.
The biggest eligibility requirement is business location. These loans are exclusively available to businesses in rural areas with populations of 50,000 or fewer residents. This might sound restrictive, but 97% of the U.S. is considered rural. Check your project’s geographical eligibility using Veritex Bank’s convenient map tool.
USDA B&I Loan Key Features:
Another popular government-guaranteed loan program is the SBA 7(a) Loan Program, which is the SBA’s primary program for offering financial assistance to small businesses nationwide.
Similarly to USDA OneRD Loans, SBA loans are issued by participating lenders, such as Veritex Bank Government Lending, with the SBA guaranteeing portions of the loans.
While SBA 7(a) Loans do not have rural location restrictions, businesses must meet the SBA size standards to qualify as a small business. These requirements include market share, revenue, and employee count — and fortunately, most businesses in the U.S. qualify.
SBA 7(a) Loans are available across various industries, such as owner-occupied commercial real estate, professional services (medical, dental, legal, accounting), childcare, car washes and gas stations, and hospitality. These loans extend up to $5 million. Veritex Bank Government Lending provides SBA 7(a) Loans starting at $500,000.
SBA 7(a) Loan Key Features:
Once you’ve decided to refinance, here’s what’s next. Now is the time to trust experts in USDA and SBA lending to help guide you. Contact Veritex Bank Government Lending to get started.
Keep in mind that while refinancing offers many advantages, government-backed loans may take longer to process. However, SBA 7(a) loans from Veritex Bank often can close within 30 days after document collection. Our expert team is ready to assist and can move as quickly as you do.
Additionally, if only a portion of the loan is used to refinance, certain restrictions may apply. A Veritex Bank Government Lending specialist will help you navigate these requirements.
The recent interest rate cut by the Federal Reserve presents a timely opportunity for businesses to refinance through USDA OneRD or SBA 7(a) Loans. Though the process requires careful planning, the potential for lower interest rates, improved cash flow, and more favorable terms makes this an option worth exploring.
If you’re a small business owner, now is the time to evaluate your current debt situation. Consult your financial advisor or reach out to Veritex Bank Government Lending to learn whether refinancing through these programs could benefit your business.
If you are a broker, target businesses that took out loans during the 2021–2023 rate hike period. Helping your clients refinance today could give them — and you — a powerful advantage in the marketplace.
