Who Can Apply for an SBA Loan?
Before becoming eligible for an SBA loan, you must have been turned down for a conventional loan. Most small businesses that meet this requirement are eligible for SBA loans, although some types of businesses are ineligible. Eligibility generally depends on four factors: 1) type of business, 2) size of business, 3) use of loan funds and 4) special circumstances.
A business owner cannot use an SBA loan:
- To purchase real estate where the participant has issued a forward commitment to the developer or where the real estate will be held primarily for investment purposes.
- To finance floor plan needs.
- To make payments to owners or to pay delinquent withholding taxes.
- To pay existing debt, unless it can be shown that the refinancing will benefit the small business and that the need to refinance is not indicative of poor management.
- Recreational facilities and clubs
- Farms and agriculture
- Fishing vessels
- Medical facilities
- Alter ego
- Change of ownership
- Probation or parole
- Academic schools
For more information on these "special circumstances" rules, consult the SBA special circumstances guidelines.
- Real estate investment and other speculative activities
- Lending activities
- Pyramid sales plans
- Illegal activities
- Gambling activities
- Charitable, religious or certain other nonprofit institutions
- Businesses with an owner who is on parole
Get started by reading How to Apply for an SBA Loan. Not sure if you meet the requirements for an SBA loan? Check out SBA Key Loan Requirements to see if you qualify.
* Adapted from the U.S. Small Business Administration Web site.