USDA vs. SBA: Which Loan Is Best for Your Business?

Howard Abrahams
Aug 21
2 min read

Updated: 2 days ago

Orange notebook open to "Small Business Loan," next to a calculator on a wooden table, with colorful sticky notes and a blue marker nearby.

If you’re exploring funding options for your business, you have likely come across two powerful but different government loan programs: SBA loans and USDA loans. Both programs can provide capital with favorable terms, but which is best for you depends on amount needed, structure, use of proceeds and business location.

What Is an SBA Loan?

SBA loans are issued by private lenders, like banks or credit unions, and are partially guaranteed by the U.S. Small Business Administration.

Common SBA loan programs include:

7(a) Loan Program – General-purpose funding up to $5 million
504 Loan Program – Fixed-asset financing for real estate or equipment

Typical uses:

Working capital
Equipment or inventory
Real estate purchases or leasehold improvements
Debt refinancing

What Is a USDA Business Loan?

USDA Business & Industry (B&I) loans are backed by the U.S. Department of Agriculture and designed to support rural economic development. Despite the name, these loans are not just for farmers. Many types of businesses are eligible as long as they operate in rural areas.

Eligibility depends heavily on location.

Generally, your business must be in a town or area with a population of 50,000 or fewer. You can check eligibility using the USDA Rural Eligibility Map.

Common uses:

Purchasing real estate or equipment
Business acquisitions
Working capital
Modernizing or expanding facilities

SBA vs. USDA: Key Differences

Feature	SBA Loan	USDA B&I Loan
Location Requirement	None	Must be in a rural area
Loan Size Range	Up to $5 million	Up to $25 million+
Common Use Cases	Working capital, equipment, real estate	Real estate, rural business expansion
Speed & Processing	Moderate (4–6 weeks or more)	Often longer (6–10+ weeks)
Collateral Requirements	Varies	Typically required

We Help You Get It Right from the Start

At Morewood Funding, we work with businesses across all industries to evaluate their financing options and choose the best path forward. We will help you: