What Happens if SBA Takes Over Key USDA Programs?
/The Small Business Administration may be on the verge of gaining new territory.
According to reports, the Trump administration is exploring whether to transfer three capital programs from the USDA’s Rural Business Cooperative Service (RBCS) to the SBA. These include:
The Business and Industry Guaranteed Loan Program
The Rural Business Investment Program
The Rural Microentrepreneur Assistance Program
While nothing is finalized, this proposal—if enacted—could mark one of the biggest structural shifts in federal small business lending in decades.
Why It Matters
These USDA programs have historically supported rural businesses with capital tools specifically designed for smaller, community-rooted ventures. Shifting them to the SBA would consolidate more lending authority under one roof, potentially streamlining access for some borrowers, but also introducing new complexity.
Here’s what’s at stake:
1. A different kind of lender oversight
SBA’s structure, processes, and lending standards differ significantly from USDA’s. Rural Development programs at USDA are typically administered by deeply embedded regional staff with high-touch local relationships. SBA, by contrast, operates on a national model with tighter average loan sizes and different review mechanics. For borrowers used to USDA’s hands-on approach, the transition could be jarring.
2. Bigger loans, bigger risk management
According to internal memos, USDA’s average loan size hovers around $8.8 million, compared to SBA’s average of $700,000. That’s a significant gap in both size and complexity. A straight shift in program ownership might not be seamless, especially if SBA infrastructure isn’t immediately equipped to handle those scale differences.
3. Opportunity for modernization
USDA itself acknowledged one of its core weaknesses: outdated technology. If SBA’s more modern systems are brought into play, this transition could offer a long-overdue update to how these programs are administered, potentially benefiting borrowers and lenders alike.
What to Watch
Stakeholder Pushback: Congressional Agriculture Committees and trade groups have voiced concern, warning that SBA may not be equipped for rural nuance.
Legal Questions: While general counsels say the president has the authority to move these programs, the reorganization may face legal or legislative friction.
Execution Risks: Even with SBA’s solid track record, managing an expanded portfolio without sacrificing borrower experience will be a serious test.
Bottom Line
This move isn’t just bureaucratic reshuffling, it has real implications for how small businesses in rural America access capital, and who gets to guide them through that process.
If it happens, it will be more important than ever for lenders, brokers, and business plan advisors to stay agile, informed, and connected to the evolving SBA landscape.
Rapid Business Plans is here to help you make sense of moments like this. Whether you're working with a preferred SBA lender or adapting to shifts in rural lending, we build plans that stay aligned, no matter how the landscape changes.
