Disadvantages of a USDA B&I Loan

USDA Business and Industry loans do have some disadvantages:

• USDA B&I loans take a few extra weeks to process, compared to a conventional commercial mortgage loan.  The process even takes a little longer than an SBA loan.
• USDA B&I lenders will often take additonal collateral, like your inventory, receivables, equipment, and home.  Once you have an USDA B&I loan, you are pretty much tied up in terms of collateral that you can offer another lender.
• USDA B&I loans usually have substantial prepayment penalties.  You will negotiate your loan terms with the bank asking for the USDA guarantee, and different banks offer different rates and terms; however, almost all USDA B&I loans will have some sort of prepayment penalty.