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What Banks Cannot Finance

The following businesses are not eligible for an SBA Loan Guarantee and thus may not be viewed as lendable by a commercial loan officer:

  • Non-profit businesses
  • Financial businesses primarily engaged in the business of lending, such as banks, finance companies and factors
  • 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)
  • Life insurance companies
  • Businesses located in a foreign country (businesses in the U.S. owned by aliens may qualify
  • Pyramid sales distribution plans’
  • Businesses deriving more than one-third of gross annual revenue from legal gambling activities
  • Businesses engaged in any illegal activity
  • Private clubs and businesses which limit the number of memberships for reasons other than capacity
  • Government-owned entities (except for businesses owned or controlled by a Native American tribe
  • Businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting
  • Consumer and marketing cooperatives (producer cooperatives are eligible)
  • Loan packagers earning more than one-third of their gross annual revenue from packaging SBA loans
  • Businesses with an Associate who is incarcerated, on probation, on parole or has been indicted for a felony or a crime of moral turpitude
  • Businesses in which the lender or any of its Associates owns an equity interest
  • Businesses which present live performances of a prurient sexual nature; or derive directly or indirectly more than 5% of their gross revenues through the sale of products or services or the presentation of any depictions or displays of a prurient sexual nature
  • A business or applicant involved in a business which defaulted on a Federal loan or Federally assisted financing resulting in a loss to the government.  A compromise agreement shall also be considered a loss
  • Businesses primarily engaged in political or lobbying activities and
  • Speculative businesses (such as oil wildcatting)

hampton roads chamber of commerce thomas nelson community college small business association george mason university