SBA Programs:

Eligibility

 

Most businesses (98%) are eligible for SBA Financing. Eligibility is determined by three factors:

1. Type of Business
2. Size of Business
3. Purpose of Loan

1. Type Of Business:

An eligible business must be organized for profit and must be engaged in or do business in the United States or its possessions. As stated, most businesses are eligible. The principal applicant must also meet certain criteria. The principal business owner (50% or more) must be a U.S. Citizen or Legal Permanent Resident (“LPR”). Aliens are eligible; however, consideration is given to the type of status possessed, e.g., resident, lawful temporary resident, etc. in determining the degree of risk relating to the continuity of the applicant's business. Excessive risk may be offset by full collateralization. The various types of visas may be discussed in more detail with the local SBA office.

2. Size Of Business:

SBA defines a small business as one that is independently owned and operated and not dominant in its field. A small business must also meet the employment or sales standards developed by the Small Business Administration and based on the North American Industry Classification System (NAICS). In general, the following criteria are used by SBA to determine if a concern qualifies as a small business and is eligible for SBA loan assistance:

• WHOLESALE - not more than 100 employees;

• RETAIL or SERVICE - Average (3 year) annual sales or receipts of not more than $5.0 to $21.0 million, depending on business type;

• MANUFACTURING - Basically not more than 500 employees, but in some cases up to 1,500 employees;

• CONSTRUCTION - Average (3 year) annual sales or receipts of not more than $7.0 to $17.5 million, depending on the specific business type.
   

3. Purpose Of Loan:

Use Of Proceeds
Loan proceeds may be used to establish a new business or to assist in the operation, acquisition or expansion of an existing business. These may include (non-exclusive):

• To purchase land or buildings, to cover new construction as well as expansion or conversion of existing facilities. SBA can finance up to 90% of the purchase price of land and building. The applicant business must occupy at least 50% of the total square footage and 67% for new construction.

• To acquire equipment, machinery, furniture, fixtures, supplies, or materials;

• For long term working capital including the payment of accounts payable and/or for the purchase of inventory;

• To refinance existing business indebtedness which is not already structured with reasonable terms and conditions;

• For short term working capital needs including: seasonal financing, contract performance, construction financing, export production, and for financing against existing inventory and receivable under special conditions; or

• To purchase an existing business.

There are certain restrictions on Use Of Proceeds