§ 120.110. What businesses are ineligible for SBA business loans?

431 words·~2 min read·/us/cfr/t13/s§ 120.110·

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

The following types of businesses are ineligible:

(a)Non-profit businesses (for-profit subsidiaries are eligible);

(b)Financial businesses primarily engaged in the business of lending, such as banks, finance companies, and factors (pawn shops, although engaged in lending, may qualify in some circumstances);

(c)Passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds (except Eligible Passive Companies under § 120.111);

(d)Life insurance companies;

(e)Businesses located in a foreign country (businesses in the U.S. owned by aliens may qualify);

(f)Pyramid sale distribution plans;

(g)Businesses deriving more than one-third of gross annual revenue from legal gambling activities;

(h)Businesses engaged in any activity that is illegal under Federal, State, or local law;

(i)Private clubs and businesses which limit the number of memberships for reasons other than capacity;

(j)Government-owned entities (except for businesses owned or controlled by a Native American tribe); (k)-

(l)\[Reserved\]

(m)Loan packagers earning more than one third of their gross annual revenue from packaging SBA loans;

(n)Businesses with an Associate who is currently incarcerated, serving a sentence of imprisonment imposed upon adjudication of guilty, or is under indictment for a felony or any crime involving or relating to financial misconduct or a false statement;

(o)Businesses in which the Lender or CDC, or any of its Associates owns an equity interest;

(p)Businesses which:

(1)Present live performances of a prurient sexual nature; or

(2)Derive directly or indirectly more than de minimis gross revenue through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature;

(q)Unless waived by SBA for good cause, businesses that have previously defaulted on a Federal loan or Federally assisted financing, resulting in the Federal government or any of its agencies or Departments sustaining a loss in any of its programs, and businesses owned or controlled by an applicant or any of its Associates which previously owned, operated, or controlled a business which defaulted on a Federal loan (or guaranteed a loan which was defaulted) and caused the Federal government or any of its agencies or Departments to sustain a loss in any of its programs. For purposes of this section, a compromise agreement shall also be considered a loss;

(r)Businesses primarily engaged in political or lobbying activities; and

(s)Speculative businesses (such as oil wildcatting). \[61 FR 3235, Jan. 31, 1996, as amended at 82 FR 39502, Aug. 21, 2017; 87 FR 38908, June 30, 2022; 89 FR 34101, Apr. 30, 2024\]

Connections50 cite this

Cited by 50 sections · top 22

CFR

Citation graph

cites case law

§ 120.110

What businesses are ineligible for SBA business loans?

Fed. Reg.×48

C.F.R.×2

Cites 0Cited by 50 across 2 sources