Type Of Business
The vast majority of
businesses are eligible for financial assistance from the SBA. However,
applicant businesses must operate for profit; be engaged in, or propose to do business
in, the United States or its possessions; have reasonable owner equity to
invest; and, use alternative financial resources first including personal
assets. It should be noted that some businesses are ineligible for financial
assistance. Certain other considerations apply to the types of businesses and applicants
eligible for SBA loan programs.
Business Types and Applicants with Additional
Considerations
FRANCHISES are
eligible except in situations where a franchisor retains power to control operations
to such an extent as to be tantamount to an employment contract. The franchisee
must have the right to profit from efforts commensurate with ownership.
RECREATIONAL FACILITIES AND CLUBS are eligible
provided: (a) the facilities are open to the general public, or (b) in
membership only situations, membership is not selectively denied to any
particular group of individuals and the number of memberships is not restricted
either as a whole or by establishing maximum limits for particular groups.
FARMS AND AGRICULTURAL BUSINESSES are eligible;
however, these applicants should first explore the Farm Service Agency (FSA)
programs, particularly if the applicant has a prior or existing relationship
with FSA.
FISHING VESSELS are eligible; however, those seeking funds
for the construction or reconditioning of vessels with a cargo capacity of five
tons or more must first request financing from the National Marine Fisheries
Service (NMFS), a part of the Department of Commerce.
MEDICAL FACILITIES hospitals, clinics, emergency outpatient
facilities, and medical and dental laboratories are eligible. Convalescent and
nursing homes are eligible, provided they are licensed by the appropriate
government agency and services rendered go beyond those of room and board.
An Eligible Passive Company (EPC) is a small
entity which does not engage in regular and continuous business activity. An
EPC must use loan proceeds to acquire or lease, and/or improve or renovate real
or personal property that it leases to one or more Operating Companies for
conducting the Operating Company's business. The EPC must comply with the
conditions set forth in 13 CFR Sec 120.111.
CHANGE OF OWNERSHIP Loans for these purposes are eligible
provided the business benefits from the change. In most cases, this benefit
should be seen in promoting the sound development of the business or, perhaps,
in preserving its existence. Loans cannot be made when proceeds would enable a
borrower to purchase: (a) part of a business in which it has no present
interest or (b) part of an interest of a present and continuing owner. Loans to
effect a change of ownership among members of the same family are discouraged.
ALIENS are eligible; however, consideration is given to the
type of status possessed, e.g., resident, lawful temporary resident, etc. in
determining the degree of risk relating to the continuity of the applicant's
business. Excessive risk may be offset by full collateralization. The various
types of visas may be discussed in more detail with the local SBA office.
PROBATION OR PAROLE applications will not be accepted from
firms where a principal (any one of those required to submit a personal history
statement, SBA Form 912):
1. is currently
incarcerated, on parole, or on probation;
2. is a defendant in a
criminal proceeding; or
3. whose probation or
parole is lifted expressly because it prohibits an SBA loan.
This restriction would
not necessarily preclude a loan to a business, where a principal had responded
in the affirmative to any one of the questions on the Statement of Personal History.
These judgments are made on a case by case evaluation of the nature, frequency,
and timing of the offenses. Fingerprint cards (available from the local SBA office)
are required any time a question on the form is answered in the affirmative.
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