SBA 7(a) Loans: Eligibility Requirements
The SBA 7a Loan White Paper: An Exhaustively Researched Guide to 7a Loans for Borrowers Based on Primary US Government Sources
Do you Meet the Basic Eligibility Requirements for an SBA 7a Loan?
By Jeff Bardos, CEO, Speritas Capital
January 4, 2021 – Greenwich, Connecticut
Call or text 203-247-4358
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SBA 7a eligibility requirements are detailed very specifically in several public documents (but not always clearly), including in the SBA’s 587 page Standard Operating Procedure document SOP 50 10 6 updated for October, 2020.
The ten page SOP section on 7a loan eligibility begins on page 117. The language below comes directly from the SOP referenced above.
Text in ITALICS is provided for clarification by Jeff Bardos, CEO, Speritas Capital Partners.
If you feel that you are in a gray area, give us a call and we can quickly let you know if you are eligible or not. This is a conversation we’ve had hundreds of times.
A. You Must be an Operating Business (except for Eligible Passive Companies).
B. You Must Be Organized for Profit
C. You Must Be Located in the United States (including its territories and possessions).
D. You Must be Be Small Under SBA Size Requirements (13 CFR Part 121). (There are special rules for franchises.) The Applicant may qualify under either the industry small business size standards or the alternative size standard.
E.g. You must have tangible net worth of less than $15MM (Assets – Liabilities) – (Goodwill) = Tangible Net Worth and earned less than $5MM on average over the past two years.
E. You Must Demonstrate the Need for Desired Credit (Credit not available elsewhere). The Lender must certify that the Applicant does not have the ability to obtain some or all of the requested loan funds on reasonable terms from non-Federal, non-State, or non-local government sources, including from the SBA Lender or Third Party Lender, without SBA assistance.
Important! Lenders must include in their files proof that you have tried to use other financial resources, including personal assets, and applied for ‘funding elsewhere’ without success before applying for an SBA loan.
Questions about SBA 7a Loan eligibility? Schedule a call with the author, email, or call/text 203-247-4358.
Note that lenders have their own eligibility standards (in addition to those imposed by the SBA), and that you can be turned down for an SBA 7a loan at one lender, and approved at another, without being told ‘why’.
This is often based on the lender’s own credit limits, and their understanding of / and appetite for risk within a particular industry.
This is where an experienced commercial loan broker with deep lender relationships like Speritas Capital Partners can add a lot of value by knowing the right SBA lenders for your situation.
Other 7a Eligibility Requirements…
You must be an eligible business type. See our comprehensive list of SBA ineligible business types & situations.
For example, you must be a US citizen, or majority owned by a US or naturalized citizen, and you can’t be delinquent on any federal debt/loan such as student loans.
You must also meet the SBA’s Credit Criteria for 7a loans.
Want to go to the source? View our SBA White Paper Sources List (with links), on our White Paper homepage.
About the Author
Jeff Bardos, CEO, Speritas Capital Partners
Jeff has over 30 years of experience in the financial services industry. After graduating from the Columbia Business School, he joined the New York Federal Reserve Bank as a senior staff member in Bank Supervision, leading the Bank Analysis department. From the nation’s central bank, Jeff moved into the private sector, working at senior levels in commercial banking, retail banking and risk management. He has also played senior founding roles in several start-ups. Learn more about Jeff.
CONTACT INFO
Jeffrey Bardos
CEO Speritas Capital Partners
Call/text Jeff at 203-247-4358
Email Jeff with your SBA eligibility questions
Schedule a call with Jeff using our online scheduling tool.
Speritas Capital Partners specializes in complex credit, collateral and cash flow situations and we never take upfront fees.
Because Speritas Capital is a debt advisory firm, we have access to a wide variety of lending structures. We’re not beholden to any one lender or structure so we can use our creativity and experience to design a structure that truly fits the needs of our clients.
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