Question 1

What's included in a USDA Feasibility Study?

Accepted Answer

A feasibility study for a new business typically includes an examination of several key areas, including: - Market analysis: This includes research on the target market, competition, and industry trends, as well as an analysis of the potential demand for the product or service. - Technical analysis: This includes an evaluation of the technical requirements for the business, such as the equipment and infrastructure needed, as well as any regulatory or compliance issues that may need to be addressed. - Financial analysis: This includes an assessment of the costs and potential revenues of the business, as well as an analysis of the potential profitability and cash flow. It also includes forecasting of future financials and potential return on investment. - Organizational analysis: This includes an assessment of the management team, their experience and qualifications, as well as the overall organizational structure of the business. - SWOT analysis: A SWOT analysis is a tool to evaluate the internal and external factors that can affect the success of a business. It includes an assessment of the business's strengths, weaknesses, opportunities, and threats. - Risk analysis: This includes an assessment of the potential risks to the business and the strategies to mitigate those risks. - Conclusion and recommendations: This includes a summary of the findings from the study and any recommendations for moving forward with the business. It's important to note that the scope of a feasibility study may vary depending on the nature and complexity of the business, and the purpose of the study.

Question 2

What is a USDA compliant feasibility study?

Accepted Answer

The vast majority of USDA-guaranteed and direct business loans require an independent feasibility study to support a loan application. The requirements for these feasibility studies are outlined in the Code of Federal Regulations (CFR) Title 7, Part 4280, Subpart B. This regulation provides the criteria and standards for feasibility studies required for USDA loans and grants.  The USDA and its Rural Development periodically introduce new and specific programs aimed at supporting certain industries or segments. These programs may have additional requirements for feasibility studies. Therefore, it is advisable to consult with an experienced lender or consulting company to determine the guidelines for a program-specific feasibility study.

Question 3

What are the requirements of a USDA Feasibility Study?

Accepted Answer

To apply for most of the USDA's direct and guaranteed business loans including more popular one like Business and Industry Guaranteed Loan Program and Food Supply Chain Loan, a feasibility study is required to assess the viability of the proposed business or project. While specific requirements for the feasibility study may vary slightly depending on the nature of the business or project, there are several common sections that the USDA is looking for. - Executive Summary: This section provides a brief overview of the project and summarizes the key findings and recommendations of the study. - Economic Impact Analysis: This section assesses the economic impact of the proposed business or project on the local community, including information on job creation, tax revenue, and other economic benefits. - Environmental Analysis: This section evaluates the potential environmental impact of the proposed business or project, including information on any necessary permits or regulatory compliance. - Market Analysis: This section analyzes the market demand for the proposed business or project, including information on the target market, competition, and market trends. - Technical Analysis: This section assesses the technical feasibility of the proposed business or project, including details on the production process, equipment, and technology requirements. - Financial Analysis: This section evaluates the financial viability of the proposed business or project, including financial projections, funding sources, and risk analysis. - Management Analysis: This section analyzes the capabilities and experience of the proposed management team, including their ability to successfully implement the project.  A feasibility study required for the Food Supply Chain (FSC) Guaranteed Loan Program typically needs two additional sections: - Food Supply Chain Factors: This section examines impact of project on the food supply chain and more specifically on agricultural producers.  - Safety Conditions: This section assesses factors relevant for food safety, certifications as well as safety of staff and customers.  A good and through study should also have relevant recommendations and conclusion.

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