The 39-year-old rapper appears on one of the X Factor finalist's new songs, which will be included on her debut album later this year.
"I didn't meet Cher in person but am aware of her work," Rhymes told the Daily Star.
"She has an incredible voice and she could make it in the US – she has the talent."
The US hip-hop star also insisted that The X Factor USA will be bigger than American Idol when it premieres on Fox in September.
"Simon [Cowell] is a great guy and all the campaigning gives people a real chance to make a difference," he explained.
"Everything Simon touches turns to gold. It will be a big hit."
Lloyd has previously described her duet with the 'I Know What You Want' rapper as an "anthem for [her] generation".
Busta Rhymes will headline the One Love Peace Festival at London's Wembley Arena alongside Sean Paul, Shaggy and Skepta on July 31.
Watch the music video for Cher Lloyd's new single 'Swagger Jagger' below: