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Will Your Business Qualify for a Small Business Loan?

Last Updated: March 3, 2009

These are the guidelines set by the Small Business Administration (SBA) to determine whether your business is considered an eligible small business:

For Profit
Your business must be operated forprofit.

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