Updated November 13, 2026
Quick answer
Pick USDA B&I when the project is rural and needs more than the SBA's $5 million 7(a) limit or a longer term: B&I goes to $25 million per borrower with terms up to the assets' useful life, capped at 40 years. Pick SBA 7(a) when the site is in or near a city, or the deal is smaller and needs SBA's capped rates. Axiant Partners, a broker in Boca Raton, compares both for a project. These are program rules, not quotes.
Side by Side
| USDA B&I | SBA 7(a) | |
|---|---|---|
| Where the business can be | Rural areas only (outside cities over 50,000 and their urbanized areas) | Anywhere in the U.S. |
| Maximum loan | $25 million per borrower | $5 million |
| Guarantee share (FY2026) | 85% under $5M, 80% from $5M to $25M | Set by the SBA by loan size |
| Longest term | Useful life of the assets, up to 40 years | Up to 25 years on real estate |
| Balloon payments | Not allowed; must fully amortize | Generally fully amortizing |
| Interest rate | Negotiated, no higher than the lender's customary rate | Negotiated under SBA maximums |
| Equity, existing business | 10% by one of three tests | Lender and SBA judgment; 10% on a change of ownership |
| Individual owners | U.S. citizens or green-card holders | U.S. citizens or nationals |
| Lines of credit | Ineligible | Available through SBA line programs |
USDA rows come from 7 CFR part 5001 and the FY2026 annual notice; SBA rows from the SBA's 7(a) program page and SOP 50 10 8.1. For the full USDA picture, see USDA Business & Industry loans.
Where USDA B&I Wins
- Size. A rural plant expansion, a larger hotel or an acquisition above $5 million can't fit in a single 7(a). Under 7 CFR 5001.406(c), B&I goes to $25 million per borrower, counting existing B&I balances.
- Term. The maximum is the justified useful life of what's financed or pledged, up to 40 years. A long-lived building can carry a lower payment than a 25-year schedule.
- Permanent residents. An individual borrower can be a U.S. citizen or a lawful permanent resident with a green card. The SBA now requires U.S. citizens or nationals for 7(a) owners.
- Equity on paper. An existing business can meet the 10% test with balance sheet equity it already has, not only cash put into the project, which can lower the cash an established company brings.
Where SBA 7(a) Wins
- Location. Most U.S. businesses are in or next to a city of more than 50,000, and B&I can't help them. Check a site in USDA eligible areas.
- Rate caps. SBA sets maximum spreads on 7(a) loans. B&I has no published cap; the rule only says the rate can't exceed what the lender charges on similar unguaranteed loans.
- Lender supply. Many more banks make SBA loans than B&I loans, so a small deal is usually quicker to place through SBA.
- Smaller deals. On a few hundred thousand dollars, the fixed costs of an appraisal and a USDA application weigh more.
Fees on the Same $4,000,000 Loan
Illustrative, not a quote. Here is the USDA side of a $4,000,000 loan at an assumed 8.00% over 25 years, using the FY2026 B&I rates in the annual notice.
| USDA B&I item | How it's figured | Amount |
|---|---|---|
| Guarantee percentage | Under $5 million | 85% |
| One-time guarantee fee | $4,000,000 x 85% x 3.0% | $102,000 |
| Retention fee, first year | Balance x 85% x 0.55% | $18,700 |
| Retention fee, full term | Same, on each year's balance | $315,930 |
| Monthly principal and interest | 8.00%, 25 years | $30,873 |
The SBA also charges an upfront guaranty fee on the guaranteed share and an annual service fee, set each fiscal year. For the current SBA fee math on a real estate deal, see the worked example in 100% SBA financing. Compare both all-in, including rate, rather than fee to fee. More detail on the USDA side is in USDA B&I rates and fees.
A Simple Way to Choose
- Check the address first. If the site isn't rural, the choice is made.
- Size the project. Over $5 million in one loan points to B&I, or to an SBA 504 for real estate.
- Look at ownership. If an owner holds a green card but isn't a citizen, B&I may be the only guaranteed option.
- Price both if the deal is rural and under $5 million. Rate, term, fees and equity can each tip it.
- Ask about timing. USDA issues a conditional commitment before closing and a loan note guarantee after; build that into your contract dates.
Hotel buyers should also read USDA hotel loans, since both programs lend on lodging under different rules, and hotel financing for the SBA side.
Get matched with USDA and SBA lenders, or talk to a specialist: (561) 268-0465.
Frequently Asked Questions
Is a USDA B&I loan better than an SBA loan?
Neither is better in general. B&I fits rural projects that need more than $5 million or a longer term; SBA 7(a) fits businesses anywhere and smaller deals with capped rates.
Can a business use USDA B&I in a city?
Generally no. The project must be in a rural area, with narrow exceptions for certain cooperatives and local food projects.
Which program allows a bigger loan?
USDA B&I, at up to $25 million per borrower. A 7(a) loan tops out at $5 million.
Can a green-card holder get a USDA business loan?
An individual borrower can be a U.S. citizen or a lawful permanent resident with a green card under 7 CFR 5001.126. SBA 7(a) now requires owners to be U.S. citizens or nationals.
Does USDA cap interest rates like the SBA?
No published cap. Rates are negotiated, and the lender can't charge more than it charges on similar loans without a guarantee.
Can USDA B&I fund a line of credit?
No. Lines of credit are ineligible; working capital is financed as a permanent term loan.
Sources & Further Reading
- 7 CFR 5001.406: Guaranteed loan amounts — B&I loans of up to $25 million per borrower.
- 7 CFR 5001.402: Term length, loan schedule, and repayment — Terms up to the useful life of the assets, capped at 40 years, with no balloon payments.
- 7 CFR 5001.401: Interest rate provisions — Rates are negotiated between lender and borrower; variable rates adjust no more than quarterly.
- 7 CFR 5001.126: Borrower eligibility — Who can borrow: entities, tribes, public bodies and individuals who are U.S. citizens or permanent residents.
- 7 CFR 5001.105: Eligible B&I projects and requirements — Eligible uses, hotels and assisted living, and the minimum equity table for existing and new businesses.
- OneRD Annual Notice of Fee Rates and Guarantee Percentages, FY2026 (91 FR 11272) — B&I guarantee fee 3.0%, retention fee 0.55% and guarantee of 85% under $5 million or 80% from $5 million to $25 million; reduced-fee tier 1.0% and 0.50%.
- SBA 7(a) Loans — Program overview and the $5 million maximum loan amount.
- SBA SOP 50 10 8.1 (effective October 1, 2026) — The SBA's rules for 7(a) and 504 loans, including equity injection, Appendix 15 on changes of ownership, and eligibility.
Figures above describe ranges commonly seen across lenders and reflect published guidance as of the date on this page. Confirm current terms with the cited source or your lender before acting.