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USDA Business Loans vs SBA Loans


The USDA Business and Industry Loan program is designed to foster the flourishing of rural America. The USDA’s government-backed lending encourages economic development in America’s overlooked small towns by supporting commercial construction and development.

Despite the USDA name, the program is not designed for agriculture. Funds may be used for most types of commercial development in towns with fewer than 50,000 residents. Similar to the SBA 7a Loan Program, the program’s key differences are highlighted in the table below.

USDA Business Loans vs SBA Loans

Loan Attribute USDA Business and Industry Loans SBA (Small Business Administration Loans)
Maximum Loan Size $10MM $5MM
Origination Fees 2% Not allowed
Guaranteed Portion 60% - 80% 75%
Security of Gurantee Strong Often Negotiated
Speed of Government Processing 90 days Immediate to 2 weeks
Collateral 1:1 discounted No regulatory requirement
Equity 10% - 20% Tangible Net Worth No regulatory requirement
Interest Rates Lender determined Lender determined
Average Default Rate 3% 17%
Prepayment Penalty Lender determined Fixed at 5/3/1
Repayment Terms Up to 30 years Maximum of 25 years
Owner Occupancy No restrictions Owner required to occupy the property

For strategic resource for rural investment...