Ineligible Businesses

April 13, 2006

	Visited: 273
	Not rated
	Rate:

Certain types of businesses are restricted from applying for or receiving loans directly from or guaranteed by the SBA. Among these restrictions are:

Nonprofit organizations are ineligible to receive assistance except those qualified as sheltered workshops and operated in the interest of workers with disabilities. For-profit businesses owned by nonprofit organizations are eligible.
Cooperatives are eligible provided size standards are met, the cooperative is a business in and of itself, and it carries on business activities for the financial benefit of its members who must also be eligible small business concerns. Consumer and marketing cooperatives are not eligible.
Businesses dealing in the creation, origination, expression or distribution of ideas, values, thoughts or opinions currently are not eligible. Specialty stores primarily engaged in selling products that promote or advocate ideas are not eligible. Specialized delivery, distribution or transportation concerns limiting themselves to distribution of ineligible material are also ineligible.
Any Cable TV system broadcasting live station(s) or selecting which programs are to be transmitted is ineligible.
Academic schools are not eligible. However, technical, secretarial, vocational and trade schools are. Nurseries, kindergartens and preschools are also eligible provided they are not primarily (50 percent or more of the time) engaged in teaching academic subjects or ideology.
Automobile floor planning concerns are not eligible.
Gambling concerns are not eligible. However, otherwise eligible small business concerns which derive less than one third of their income from the following are eligible: (a) income or commissions derived from the sale of official state lottery tickets under a state license; (b) gambling that is licensed and supervised by state authority in those states where such activities are legal.
Concerns involved in speculation of any type (including real estate) are ineligible with the exception of a business, such as a grain elevator, which hedges in futures commodity trading in the course of ordinary operations and to protect itself from price fluctuations.
Concerns primarily engaged in lending or investment are not eligible with the exception of pawn shops which derive a minimum of 50 percent of their income from the sale of merchandise rather than the interest on loans.
Loans may not be made which would encourage a monopoly or be inconsistent with the accepted standards of freely competitive enterprise.
Pyramid sales distribution plans are ineligible.
Loans to applicants engaged in illegal activities or production, servicing or distribution of illegal products are not eligible. In addition, applicants currently incarcerated, on probation or on parole or who have criminal cases pending against them are not eligible. Applicants whose probation or parole has been lifted solely because it is an impediment to obtaining a loan are not eligible.