What does credit not available elsewhere mean for an SBA loan?
Short answer
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).
It means you cannot get the money on reasonable terms without SBA's help. 13 CFR § 120.101 limits SBA assistance to applicants who meet that test. SOP 50 10 8.1, Sec. A, Ch. 1, Para. H tells lenders how to show it.
What the lender must address
The lender must determine that some or all of the loan is not available from:
- The liquidity of the applicant and of owners of 20% or more, including their spouses and minor children.
- Conventional lenders and other non-government sources, including the lender itself.
Acceptable reasons
The credit memo must state a specific weakness. Examples in Para. H:
- You need a longer term than the lender's policy allows.
- The loan exceeds the lender's limit for one customer.
- The collateral does not meet policy.
- The lender's policy does not allow your industry or new businesses, such as one open no more than 2 years.
Reasons that fall short
A lender cannot cite its conventional credit score policy as the sole reason. It cannot rely solely on secondary market liquidity or its legal lending limit. It cannot rely at all on Community Reinvestment Act ratings or a better lien position.
If your loan meets the lender's conventional standards, the project is not eligible for an SBA loan.
Ask lending partners about your loan
Tell us the amount you need and what it is for. We refer you to lenders that may fund businesses like yours, and it costs you nothing.
Janover Capital LLC is not a lender and is not the SBA. The lender makes the credit decision. A lender or marketplace may pay us a referral fee if we connect you, at no cost to you. Advertiser disclosure.