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These loans can be used for owner-occupied businesses, like the SBA loan, but can also be used for INVESTOR PROPERTIES! They can go all the way up to $10 Million - much hiher than SBA. And they requiere a lot less down, typically 10%-20%, much less than most banks will lend on - especially on investor deals. And these can be used for construction as well. The key is that they must be in rural areas which is defined by a population of less than 50,000 people in the city. Many lenders won't lend in towns of less than 50,000 people so this loan program really fills a gap. And with so many banks no longer doing construction loans, this product is HOT. If what you are building will create jobs; it is even better.
For example, say you want to build a hotel in a city that is near a major metro area but only has a population of 30,000 people. This describes a tremendous amount of cities across America . including the city I live in. If that loan size is $7 Million or so you are going to be stuck. SBA only goes to $5 Million, and the big construction money only wants to look at hotels over $10 Milions. But the USDA loan can fill the gap and you will not have to put down 35% either! Rates will usually be tied to prime on an adjustable but that puts you in the 5-6% range right now and fixed rates may be available on extremely strong deals. Because it is a government-backed loan, it does take longer to close but this loan WILL get you closed and with a lot less down that a conventional loan. Hey, you can do investor hostels on this deal! We have a loan that just got approved on this program for a saw mill refinance in Arkansas. That broker had been trying to place that loan for 6 months and we did get it done!