Will your Business qualify for a Small Business Loan?
These are the guidelines set by the
SBA (Small Business Administration) to determine whether your business is
considered an eligible small business:
For Profit
Your business must be operated for
profit.
Size
Standards
Size is determined based on the average
number of employees for the preceding 12
months, or on sales volume average over a
3 year period. However, even if approval
of your loan proceeds will result in an
increase in size beyond the size
standards, your current size is
considered. Most businesses fall into one
of the following categories.
- Manufacturing:
Depending on the type of product
manufactured, number of employees
may range from 500 to 1500
- Wholesaling:
Maximum number of
employees may not exceed 100
- Services:
Average annual receipts must fall
between $5 million and $21
million, depending on the
industry
- Retailing:
Average annual receipts must
fall between $3.5 million and
$21.5 million, depending on the
industry
- Construction:
Average annual receipts for
general construction must fall
between $9.5 million and $17
million, depending on the
industry
- Special
Trade Construction:
Average annual receipts may not
exceed $7 million
- Agriculture:
Average annual receipts must fall
between $1 million and $9
million, depending on the
industry
Use of Proceeds
Your SBA 7(a) loan request will be
considered ineligible if you
intend to use proceeds to:
- provide funds for
speculation
- purchase real
estate to be primarily held for
sale or investment
- create or
encourage a monopoly
- create or
encourage a conflict of interest
- pay delinquent
state and federal taxes
Business
Type
If your business falls within one of the
following categories, it is ineligible
for an SBA loan. In this case, see if you qualify for Business
& Industry (B & I) Loan.
- Non-profit
organization
- Financial business
primarily engaged in the business
of lending
- Passive business
owned by developers and landlords
- Academic school
with a religious affiliation
- Speculative firm
- Life insurance
company
- Business located
in a foreign country
- Gambling facility
- Pyramid sales
organization
- Recreational
facility not open to the general
public
- Business engaged
in any illegal activity
- Private club or
business which limits the number
of memberships for reasons other
than capacity
- Government-owned
entity
- Consumer and
marketing cooperative
- Loan packager
earning more than one-third of
their gross annual revenue from
packaging SBA loans
- Business with an
associate who is incarcerated, on
probation, on parole, or has been
indicted for a felony or crime of
moral corruption
- Business which
presents live performances of an
offensive sexual nature; or sells
products or services of a sexual
nature
- Unless waived by
SBA for good cause, business that
has previously defaulted on a
Federal loan
- Business primarily
engaged in political or lobbying
activities
SBA loan terms are calculated based
on your use of proceeds. The following
list shows what loan terms are available
based on your use of proceeds.
- New
building purchase:
25 years
- Building
improvements:
20 years
- Mortgage
refinance:
20 years
- Machinery
& equipment purchase:
10 years
- Leasehold
improvements:
10 years
- Other
debt refinance: 7
years
- Inventory:
7 years
- Working
capital: 7 years
Do you have a question you feel we haven't answered?
For a small fee, you can talk to a counselor on the phone or Buy the Book!
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