§ 120.110 What businesses are ineligible for SBA business loans?

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).