- LIFESTYLE -
nuts and bolts and SBA eligibility. If you have been told by a lender that
“you can’t do an SBA loan on that deal,” it may just mean that THEY can’t do
a SBA loan on that particular transaction. Another lender may very well be
able to accommodate the loan.
What determines SBA eligibility? Well, here we go with the ultra-condensed
version…
Business must be eligible – The business needs to be a for-profit and “active”
business that is legal on all levels…. so no non-profits… and no cannabis
operations, Dude. Active income means no financing of “passive” investments
such as apartments.
Borrower must be eligible – Business must be owned in majority by either a
US Citizen or Legal Permanent Resident.
Purpose must be eligible - Any valid business purpose.
Collateral – Per the SBA, lack of collateral is NOT a reason to NOT do the
loan. However, whatever is financed must be taken as collateral AND if the
loan is considered “under collateralized,” then additional collateral will be
required, but only if available.
Business must show the ability to repay the loan –
Ability can be based on historic numbers OR
projection. It just has to make sense enough
for a lender to underwrite the loan.
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2017 - ISSUE V