SBA loan eligibility: questions and answers

All 59 answers on SBA loan eligibility

Each entry gives the short answer. Open it for the full explanation and its sources.

What makes a business eligible for an SBA 7(a) or 504 loan?

The business must be operating, for-profit, U.S.-based, small under SBA size standards and able to show need for the credit (13 CFR § 120.100). It also cannot be on the ineligible list in 13 CFR § 120.110.

Can a U.S. company with foreign operations get an SBA loan?

Yes, if it is organized in the United States, primarily operates here and pays U.S. taxes. Proceeds must benefit only the U.S. borrower. A business located in a foreign country is ineligible (SOP 50 10 8.1, Sec. A, Ch. 1, Para. C; 13 CFR § 120.110(e)).

How does SBA decide if a business is small enough for a loan?

SBA uses the size standard for your primary industry in 13 CFR § 121.201, in receipts or employees. Or it uses an alternative test: $20 million tangible net worth and $6.5 million average net income. Affiliates count (SOP 50 10 8.1, Sec. A, Ch. 1, Para. D).

How does SBA calculate annual receipts for its size standards?

Receipts are generally total income plus cost of goods sold from your federal tax returns. You may average your last 3 or 5 completed fiscal years if you have been open 3 or more. Affiliates' receipts are added (13 CFR § 121.104).

How does SBA count employees for its size standards?

SBA averages everyone you employed, full-time, part-time or temporary, across each pay period in the last 24 completed calendar months. Staffing agency and professional employee organization workers count, and so do affiliates' employees (13 CFR § 121.106).

Which NAICS code sets your SBA size standard?

Your primary industry sets it. SBA looks at how receipts, employees and costs split across your industries in the most recently completed fiscal year (13 CFR § 121.107). Form 1919 says your NAICS code must match your IRS tax filings, if applicable.

What is the SBA alternative size standard?

It is a second way to qualify as small for 7(a) and 504 loans. Including affiliates, tangible net worth cannot exceed $20 million. Average net income after federal taxes for the last two fiscal years cannot exceed $6.5 million (13 CFR § 121.301(b)(2)).

When does SBA measure your size, and what if you grow afterward?

Size is set on the date the application is accepted for SBA processing, or for delegated loans the date the lender approves the loan. Later growth does not count. If you buy a business, the combined size must fit (13 CFR § 121.302; SOP 50 10 8.1, Para. D.2).

Are SBA size standards changing?

Not yet. SBA proposed new size standards for 338 industry groups and industries on August 20, 2026; the change is proposed only (91 FR 53741). Until SBA issues a final rule, the current table in 13 CFR § 121.201 governs.

Do your other businesses count as affiliates for an SBA loan?

Only in set ownership cases. SBA looks at ownership over 50% and, for some owners, 20% or more in the same 3-digit NAICS subsector. A company you personally own in a different subsector is not an affiliate on ownership grounds (13 CFR § 121.301(f)).

Does a spouse's business count toward SBA size?

Only if the ownership test is met. SBA combines the interests of spouses and minor children in a business. It does not combine them when each holds an individual interest in a different business. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. D.4.

Do affiliates count against SBA loan limits?

Yes. SBA applies its loan maximums to you and all affiliates as if they were one business. The SBA guaranty cap is generally $3,750,000 for a borrower and its affiliates. Source: 13 CFR § 120.151.

Can a nonprofit get an SBA loan?

Not a 7(a) or 504 loan. Applicants must be organized for profit (13 CFR §§ 120.100(b), 120.110(a)). A for-profit subsidiary of a nonprofit can qualify if other rules are met, and most private nonprofits may apply for SBA disaster loans.

Can a bank, finance company or factoring company get an SBA loan?

No. SBA cannot guarantee a loan to a business primarily engaged in lending or investment. Banks, finance companies, factoring companies, investment companies and bail bond companies are all barred. Source: 13 CFR § 120.110(b); SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.2.

Can a pawn shop or check-cashing business get an SBA loan?

Possibly. A pawn shop is eligible if more than 50% of prior-year revenue is from merchandise sales rather than loan interest. A check casher is eligible if more than 50% of revenue is from cashing checks. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.2.

Can insurance, advisory or mortgage firms get SBA loans?

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.

Can a landlord or real estate investor get an SBA loan?

Generally no. A business primarily engaged in owning real estate and leasing it for any purpose is ineligible. An Eligible Passive Company is the exception. Source: 13 CFR § 120.110(c); SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.3.

What is an Eligible Passive Company?

It is a small entity or trust that leases real or personal property to an eligible Operating Company. It is the exception that lets a separate real estate entity borrow. It must meet every condition in 13 CFR § 120.111.

Can a hotel, campground or short-term rental get an SBA loan?

Yes, if more than 50% of prior-year revenue comes from guests staying 30 days or less. The business must also meet zoning and other legal rules. A start-up must show that result in its projections. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.3.

Can apartment buildings or mobile home parks get SBA loans?

No. Under SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.3, apartment buildings and mobile home parks are not eligible. A mixed-use building can work when an operating business occupies at least 51% of the rentable space (13 CFR § 120.131).

Can salon suites, coworking or ghost kitchens get SBA loans?

Not if they earn rent from independent businesses. SBA bars them unless revenue is membership dues, no one has an assigned space and the operator supplies a working setup. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.3.

Can a nursing home or assisted living facility get an SBA loan?

Yes, if it is licensed as a nursing home, assisted living facility or state equivalent and provides healthcare or medical services. A residential facility without that license and those services is ineligible (SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.3).

Does a management agreement make a business ineligible?

It does if the manager has sole discretion over operations. The business is then an ineligible passive business. It can qualify if it keeps meaningful oversight of budgets, large spending, bank accounts and employees. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.3.

Can cell tower, solar or EV charging firms get SBA loans?

It depends on the role. A business that only leases land for a tower, solar panels, billboard or wind turbine is ineligible, but the operator is eligible. EV charging stations run as passive stand-alone assets are ineligible (SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.3).

Can a med spa or other licensed practice get an SBA loan?

Yes, if the ownership structure meets every state requirement where the business operates. The lender must document eligibility and the ownership structure under those rules in the loan file. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.3.

Can a business with gambling revenue get an SBA loan?

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.

Can a multilevel marketing business get an SBA loan?

No. Businesses using pyramid or multilevel sales distribution plans are not eligible. The SOP gives no revenue threshold or exception. Source: 13 CFR § 120.110(f); SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.

Can a marijuana or cannabis business get an SBA loan?

No. A business that grows, produces, processes, distributes or sells marijuana products is ineligible, even where state law allows it. Some smoke and paraphernalia sellers are also barred. Source: 13 CFR § 120.110(h); SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.

Can a hemp or CBD business get an SBA loan?

A hemp business can, if the hemp meets the federal definition and any applicable state definition. CBD businesses are reviewed on source, products, health claims and legal compliance, and lenders must collect proof. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.

Can a private club or single-gender gym get an SBA loan?

Not if it restricts patronage for any reason other than capacity. A men's-only or women's-only health club is not eligible (13 CFR § 120.110(i); SOP 50 10 8.1, Sec. A, Ch. 1, Para. E). A gym that markets to one gender but admits both can qualify.

What does SBA consider a speculative business?

A business that holds an item until its price rises, or takes a risky chance at an unusually large profit. Named examples include oil wildcatting, dealing in stocks or commodity futures, and research and development. Source: 13 CFR § 120.110(s); SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.

Can a spec home builder or house flipper get an SBA loan?

Generally only through the 7(a) Builders CAPLine, which finances small general contractors building or rehabilitating property for resale. Otherwise, building homes for future sale is speculative and ineligible. Source: 13 CFR §§ 120.110(s), 120.391; SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.

Can a green card holder own a business that gets an SBA loan?

No, not for 7(a) or 504 loans. Since March 1, 2026, lawful permanent residents may not own any percentage of the applicant (SBA Policy Notice 5000-876441). All direct and indirect owners must be U.S. citizens or U.S. nationals with a principal residence in the United States.

Can visa holders or DACA recipients get an SBA loan?

No. SOP 50 10 8.1, Appendix 3 lists individuals granted asylum, refugees, visa holders, non-immigrant aliens and those under Deferred Action for Childhood Arrivals (DACA) as Ineligible Persons. No 7(a) or 504 loan may be made if any direct or indirect owner is one, at any percentage.

Can a U.S. citizen living abroad get an SBA loan?

No. Anyone whose principal residence is outside the United States, its territories or possessions is an Ineligible Person, U.S. citizens included. That owner must completely divest before the SBA loan number is issued. Source: SOP 50 10 8.1, Appendix 3.

Are naturalized and dual citizens eligible for SBA loans?

Naturalized U.S. citizens are eligible with no special restrictions. A dual citizen is eligible unless the other citizenship would make the deal ineligible. In that case the lender should confirm that country no longer regards the person as a citizen (SBA Information Notice 5000-877673, question 4).

Can an ineligible owner sell out before an SBA loan?

Yes, if the owner completely divests before the SBA loan number is issued. A partial sale does not work. The six-month lookback does not block a full divestiture made before that date (SOP 50 10 8.1, Sec. A, Ch. 1, Para. F).

Does Form 1919's 51% citizen ownership language still apply?

No. Form 1919 (02/2025) still carries that certification, but SBA's March 1, 2026 rule requires 100% ownership by U.S. citizens or nationals. SBA says it is updating the form. Until then, lenders must collect added certifications (SBA Procedural Notice 5000-876626).

Can a foreign investor own part of an SBA-financed business?

No. All entity owners, direct or indirect, must be created, organized or incorporated in the United States, its territories or possessions. The old 5% foreign ownership exception ended March 1, 2026. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. F.

Can you get an SBA loan with a criminal record?

Possibly. A business is ineligible if an Associate is incarcerated or serving a sentence of imprisonment. The same applies if an Associate is under indictment for a felony, financial misconduct or a false statement. Past convictions are not automatically disqualifying. Source: 13 CFR § 120.110(n).

Can someone on probation or parole get an SBA loan?

Possibly. SOP 50 10 8.1, Sec. A, Ch. 1, Para. E says a business owned by someone on parole or probation may be eligible. If the business depends primarily on that person, the applicant must give the lender a plan for continued operations if the person is reincarcerated.

Who counts as an Associate of a small business under SBA rules?

An officer, director, owner of more than 20% of the equity, or Key Employee. It also includes entities those people own or control at 20% or more, and anyone in control of or controlled by the business. Source: 13 CFR § 120.10.

Do you still need SBA Form 912 for an SBA loan?

It depends on your lender. SOP 50 10 8.1 does not list Form 912 in its forms appendix, and criminal status is asked on Form 1919 or Form 1244. SBA still publishes Form 912 and says it uses the form as part of assessing eligibility.

What does credit not available elsewhere mean for an SBA loan?

It means the desired credit must not be available on reasonable terms from non-federal, non-state and non-local government sources. The lender certifies this and keeps support in its file (13 CFR § 120.101; SOP 50 10 8.1, Sec. A, Ch. 1, Para. H).

Do you need a bank denial letter to get an SBA loan?

Not under SBA's text. The lender certifies that credit is unavailable and explains why in its credit memo. SOP 50 10 8.1, Sec. A, Ch. 1, Para. H does not mention a denial letter.

Can you get an SBA loan if you have cash in the bank?

Possibly. The lender must consider the liquidity of the business and of owners of 20% or more, including spouses and minor children. SBA lets owners keep reasonable funds for medical, education and retirement needs (SOP 50 10 8.1, Sec. A, Ch. 1, Para. H).

Is there a minimum credit score for an SBA loan?

SBA sets no minimum credit score; the lender applies its own credit standards. SOP 50 10 8.1 states no numeric minimum. SBA also discontinued the FICO Small Business Scoring Service (SBSS) score for 7(a) Small loans effective March 1, 2026 (SBA Procedural Notice 5000-876777).

Can you get an SBA loan after defaulting on a federal loan?

Not while a loss to the government stands. The bar reaches the applicant and businesses tied to it or an Associate. Full satisfaction of the loss or an SBA waiver can clear it. Source: 13 CFR § 120.110(q); SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.

Can a minority investor get a waiver of the prior loss rule?

Yes, case by case. Since June 1, 2026, SBA may waive the rule for an owner who held less than 20% of the failed business. The owner cannot have been a guarantor or co-borrower, or had control. Source: SBA Policy Notice 5000-879464.

Can you get an SBA loan with defaulted student loans?

It depends. A student loan is not a Prior Loss. But an applicant or guarantor with a federal nontax debt 90 days past due is ineligible. Exceptions include a repayment agreement paid as agreed. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.

Can you get an SBA loan if you owe back taxes?

It is a problem. Applicants certify they are current on federal, state and local taxes. A business that has not filed required federal returns is ineligible. Whether an IRS payment plan satisfies this is not stated. Source: SOP 50 10 8.1, Sec. A, Ch. 5, Para. B.

Can you get an SBA loan after bankruptcy?

Possibly. Bankruptcy is not an ineligible category in 13 CFR § 120.110 or SOP 50 10 8.1, Sec. A, Ch. 1, Para. E. Lenders must weigh it, and on SBA Express loans how much to factor it in is left to the lender's business judgment.

Can you get a new SBA loan if an existing SBA loan is past due?

No. A business with an existing 7(a) or 504 loan that is not current when the new SBA loan number is issued is ineligible. Current means no required payment has remained unpaid for more than 29 days (SOP 50 10 8.1, Sec. A, Ch. 1, Para. E).

Can a startup get an SBA loan?

Yes. SBA has no general ban on start-ups, which it defines as businesses in operation for 1 year or less. A 7(a) start-up needs equity of at least 10% of total project costs, and lenders rely on projections. Source: SOP 50 10 8.1, Sec. B, Ch. 1, Para. C.

Is there a minimum time in business for an SBA loan?

Not as a general rule. SOP 50 10 8.1, Sec. A, Ch. 1 sets no minimum for 7(a) or 504 loans. Seasonal CAPLines, Export Express, the Export Working Capital Program and the 7(a) Working Capital Pilot have 12-month tests. Lenders may set their own.

Does a franchise need to be on the SBA Franchise Directory?

Yes. Under SBA rules, a brand that meets the FTC definition of a franchise must be on the SBA Franchise Directory to obtain SBA financing. Lenders must check the Directory before submitting or approving the loan. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. G.

What if your franchise brand is not on the SBA Directory?

If the brand meets the Federal Trade Commission (FTC) definition, the application cannot proceed until it is listed. The franchisor submits its agreement, disclosure document and other required documents to franchise@sba.gov for review. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. G.

Do license or dealer agreements count as SBA franchises?

They can. SBA treats any relationship that meets the FTC definition as a franchise, whatever its label. Gas stations covered by the Petroleum Marketing Practices Act and new car dealers under qualifying manufacturer agreements are named. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. G.

Can a master franchisee or area developer get an SBA loan?

A master franchisee cannot. Its income comes from royalties on units others operate, which SBA treats as passive. A franchisee with area development rights to open units it owns can qualify if it and its affiliates are small. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. G.