Qualifying for a Small Business Administration (SBA) guaranteed loan requires the added first step of determining whether you and your company meet the SBA’s eligibility requirements.
Knowing whether you meet the eligibility requirements can be complicated but don’t worry, we’ve made it simple by listing common causes for individuals, businesses and use of proceeds to be deemed ineligible.
If you’d like to go deeper be our guest and complete the SBA Eligibility Questionnaire For Standard 7(a) Guaranty.
Save time and energy by determining whether you and your company meet the SBA’s eligibility requirements before applying.
After you read the following eligibility requirements, if you have additional questions or are interested in starting your loan application, visit thinksba.com/ready.
Ineligible Individuals
The following individuals are not eligible to obtain an SBA guaranteed loan:
- Those who do not possess reasonable personal liquidity; such as cash, marketable securities or cash value of life insurance to inject the minimum equity percentage into the financing package.
- Those who possess excess liquidity between 1 – 2x the total financing package which includes the aggregate outstanding commitment of SBA loan, owner’s injection and any other related financing.
- Those who do not possess commensurate experience to promote the sound development or preserve the existence of the business.
- Are currently incarcerated, on probation, on parole or have been indicted for a felony or a crime of moral turpitude.
- Are illegal aliens
Ineligible Businesses
The following businesses are not eligible to obtain an SBA guaranteed loan:
- Non-profits
- Passive income business that holds real and/or personal property from which it receives rental income
- Pyramid sale distribution plan or direct marketing consumer cooperatives
- Organizations principally engaged in indoctrinating religious beliefs
- Business primarily engaged in political or lobbying activities
- Business whom derives more than one-third of gross annual revenue from legal gambling activities
- Businesses possessing more than $15 million in tangible net worth or more than $5 million net profit for previous fiscal year.
- Businesses operating outside of the United States regardless of ownership citizenship status
Ineligible Use of Proceeds
The following use of proceeds are not eligible to obtain an SBA guaranteed loan:
- Repay delinquent IRS withholding taxes, sales taxes or similar funds held in trust
- To provide or refinance funds used for payments, distributions, or loans to associates of the applicant, except payment of ordinary compensation for services rendered at a fair and reasonable rate
- Refinance loan taken by the applicant that was not directly collateralized by the proposed use of proceeds
What’s The Verdict?
Most likely, you are eligible and are therefore ready to apply for an SBA guaranteed loan. It’s not time celebrate yet, there is still a lot more work ahead but don’t worry, we’re here to help every step of the way.
Let’s Get Started
If you are seeking capital to grow or start your business and you are located in the United States, employ United States citizens and are produce a product or provide a service that benefits the American public and enhances the public trust it’s time to get started.
Call us at (858) 762-2774 or apply online.
Do I need collateral to qualify for an SBA loan?