Can a business with gambling revenue get an SBA loan?
Short answer
Yes, if legal gambling brings in one-third or less of annual gross revenue, rental income included. Gambling cannot be the purpose of the business. Casinos, racetracks and skill-game businesses are out at any percentage. Source: 13 CFR § 120.110(g); SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.
Yes, up to a point. 13 CFR § 120.110(g) bars businesses earning more than one-third of gross annual revenue from legal gambling. SOP 50 10 8.1, Sec. A, Ch. 1, Para. E applies that limit to the prior year and counts rental income.
When gambling revenue is allowed
A business may qualify if one-third or less of its annual gross revenue comes from:
- Commissions on official state lottery ticket sales under a state license.
- Gambling activities licensed and supervised by a state authority where those activities are legal.
A convenience store selling lottery tickets is one example. Track the gambling line separately in your books.
When it is not allowed at any level
If the purpose of the business is gambling, it is not eligible regardless of the percentage. The SOP names pari-mutuel betting racetracks, casinos and skill games such as video poker.
Rental income counts
Gambling income includes rental income. If you lease space for gambling, count that rent toward the one-third.
Disclosure
Form 1919, question 7, asks whether any of your revenue comes from gambling. A yes requires a separate attachment with details. Any activity illegal under federal, state or local law makes a business ineligible (13 CFR § 120.110(h)).
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