Can insurance, advisory or mortgage firms get SBA loans?
Short answer
Many can. Independent insurance agents are not barred, fee-based financial advisors are eligible and mortgage servicers can qualify. Life insurance carriers and mortgage companies that hold loans in their own portfolio are ineligible. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.2.
Many can, because the ban targets businesses whose product is money. SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.2 separates the eligible from the ineligible.
Insurance
Life insurance carriers are not eligible (13 CFR § 120.110(d)). Independent agents are outside the ban. SBA's size table lists insurance agencies and brokerages (NAICSThe federal code system that sorts businesses by industry. 524210) at $15.0 million in receipts (13 CFR § 121.201).
Financial advisors
A business providing financial advisor services on a fee basis is eligible. It cannot use loan proceeds to invest in its own portfolio of investments.
Mortgage companies
- A mortgage company primarily engaged in servicing loans is eligible.
- A mortgage servicing company that disburses loans and sells them no later than 14 calendar days after closing is eligible.
- A mortgage company that makes loans and holds them in its portfolio is not eligible.
Loan brokers and packagers
Loan packagers earning more than one-third of gross annual revenue from packaging SBA loans are ineligible (13 CFR § 120.110(m)). The SOP includes Lender Service Providers in that group.
What lenders check
Form 1919, question 7, asks about revenue from lending and loan packaging. Have your revenue breakdown ready.
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