SBA ELIGIBILITY QUESTIONNAIRE FOR STANDARD 7(a) …
SBA ELIGIBILITY QUESTIONNAIRE FOR STANDARD 7(a) GUARANTY
This questionnaire is a tool to assist lenders in making basic eligibility determinations. For more information on loan eligibility, please refer to SOP 50 10 5(D). If eligibility is questionable, please contact the Standard 7(a) Loan Guaranty Processing Center (LGPC) at (877) 475-2435 or 7aquestions@. Please note: All final eligibility determinations are made by SBA, not the lender.
If any statement below is checked "False", the loan is ineligible or requires additional information and clarification.
I. General Information -- Complete the following:
Applicant Name Lender Name Describe Type of Business Purpose of Loan
The products and/or services of the applicant business are available to the general public.
This loan will benefit the small business.
The applicant does not discriminate with respect to goods, services, or accommodations offered based on race, color, religion, sex, marital status, handicap or national origin of a person or fail or refuse to accept a person on a non-segregated basis as a customer.
TRUE
FALSE
II. Ineligible Businesses -- Certain business types are ineligible for SBA assistance.
A non-profit business Primarily engaged in lending A passive business owned by developers or landlords that do not actively use or occupy the assets acquired
or improved with the loan proceeds that is not an Eligible Passive Company discussed below (e.g. shopping center) A life insurance company (life insurance agents, however, may be eligible) Located in a foreign country or owned by undocumented aliens Selling through a pyramid or multi-level sales distribution plan Deriving more than one-third of gross annual revenue from legal gambling activities Engaged in any illegal activity Restrict patronage for reason other than capacity A government-owned entity (a small business owned or controlled by a Native American tribe may be eligible if the business is a legal entity separate from the tribe) Principally engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs A consumer or marketing cooperative (producer cooperatives may be eligible) Earning more than 1/3 of its gross annual revenue from packaging SBA loans Business with an associate who is incarcerated, on probation, on parole, or has been indicted for a felony or a crime of moral turpitude Business in which the Lender or any of its associates owns an equity interest Business which presents live performances of a prurient sexual nature or derives more than 5 percent of its gross revenue from the sale of products or services, or the presentation of any depictions or displays of a prurient sexual nature Business that has defaulted, or has a principal who has defaulted, on a Federal loan or Federally-assisted financing resulting in the Federal government sustaining a loss, (unless waived by SBA for good cause) Primarily engaged in political or lobbying activities Speculative in nature (such as a shopping center developer, oil wildcatting, or primarily engaged in R&D)
The Small Business Applicant is not one of the above ineligible business types. If "False", the loan is ineligible.
TRUE FALSE
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III. Potentially Ineligible Businesses -- The following businesses may be eligible if they meet certain conditions.
Pawn Shops. Eligible only if more than 50% of its gross revenue for the previous year was from the sale of merchandise rather than from interest on loans.
Hotels, Motels, RV parks, Marinas, Campgrounds, and similar type of business. Eligible only if more than 50% of the business's revenue for the prior year is derived from transients who stay for 30 days or less at a time.
Residential Care Facilities. Eligible if licensed as nursing homes or assisted living facilities.
Income derived from Gambling only Eligible if: a) this income is 1/3 or less of gross annual revenue,
The Small Business Applicant is not one of the above potentially ineligible business types. If "False", Lender must discuss the specific facts which justify eligibility in the attached "Comments" page. TRUE FALSE
IV. Citizenship -- SBA has certain restrictions and requirements when principals of a business are not U.S. citizens.
All principals are U.S. citizens. If "False", complete the Alien Ownership Addendum (Addendum A).
TRUE FALSE
V. Statement of Personal History, SBA Form 912 -- SBA has specific procedures for anyone who has been
arrested and is required to provide Form 912. If an individual that was required to complete a 912 at the time of application answered "Yes" to question 7 on Form 912 and is presently under indictment, on parole or probation, the applicant business is ineligible.
Questions #7-9 are all marked "No" on SBA Form 912.
TRUE
If "False", complete the Statement of Personal History Addendum (Addendum B).
FALSE
VI. Size Standard -- Complete this section for the business applicant only. SBA will then determine if the applicant
(and any affiliates) meets the applicable size standard and qualifies as a small business.
(Use one of the two size standards below) Regular Size Standard
Alternative Size Standard
Avg. gross receipts over last 3 fiscal years
Number of employees
Avg. net income over last 2 fiscal years (after federal income tax) (not in excess of $5 millions)
Tangible net worth
(not in excess of $15 millions)
VII. Affiliation -- Entities are affiliated if one has the power to control the other or a third party has the power to control
both. For the full definition of affiliation, see 13 CFR 121.103. (See also 13 CFR 121.107 and 121.301).
The Applicant does not have any possible affiliates. If "False", complete the Affiliate Eligibility Addendum (Addendum C).
TRUE FALSE
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VIII. Preference -- A lender may not take any action in connection with an SBA-guaranteed loan that establishes a
preference in favor of the lender.
The Applicant is not currently seeking other financing.
TRUE FALSE
If "False", provide the following information for the other loan(s) and attach an additional "Comments"
page, if necessary.
Loan Amount: Repayment Terms: Collateral: Purpose of Loan:
Loan Amount: Repayment Terms: Collateral: Purpose of Loan:
IX. Personal Resources Test -- SBA may not provide financial assistance to any applicant able to obtain
reasonable, non-federal financing, including the utilization of the excess liquid assets of the principals of the applicant.
(Complete the following) Step 1
SBA Loan Amount $ ___________
Other Financing $ ___________
Cash Injection
Total Financing Package
$ ___________ $ ___________
Step 2 Total Financing Package is:
$250,000 or less
$250,001 to $500,000
Over $500,000
Maximum liquid assets per principal is:
The greater of 2X the total financing package or $100,000
The greater of 1.5X the total financing package or $500,000
The greater of 1.0X the total financing package or $750,000
Step 3
Per the calculation from Step 2 above, the maximum liquid assets per principal (including
spouse and dependent children) is:
$ _______________
Step 4:
Principals
Liquid Assets
Excess Liquid Access
$0.00 Total: ______________________
None of the principals have liquid assets that exceed the maximum liquid assets per principal as calculated
above.
TRUE FALSE
If "False", the SBA loan must be reduced by this amount, and these funds must be injected into the
project prior to any SBA loan funds.
1) "Principals" are sole proprietors, general partners and owners of 20% or more interest in the applicant (including any interest held by spouses and dependent children).
2) "Liquid Assets" are cash and cash equivalents, including savings accounts, CDs, marketable securities, and the cash value of life insurance and similar assets (this includes assets held in a revocable trust). Qualified retirement accounts such as IRAs, Keogh or 401k plans, as well as Health Savings Accounts, tax-advantaged Educational Savings and other similar assets, are NOT liquid assets.
3) "Excess Liquid Assets"--The amount by which each principal's liquid assets (including the assets of spouses and children) exceed the maximum liquid asset amount indicated above.
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X. Eligible Passive Company (EPC) Rule -- This rule is an exception to SBA regulations that prohibit financing
assets which are held for their passive income. Because the EPC rule is an exception, it is interpreted strictly.
Loan proceeds are not being used to finance or refinance fixed assets owned by an entity other than the
Operating Company (OC).
TRUE FALSE
If "False", complete the Eligible Passive Company/Operating Company Addendum (Addendum D)
XI. Use of Proceeds -- Additional requirements apply to particular uses of SBA loan proceeds as follows:
a) Loan proceeds are not being used to refinance debt. If "False", complete the Debt Refinancing Addendum (Addendum E)
TRUE FALSE
b) Loan proceeds are not being used for a change of ownership (or to refinance a previously financed change of ownership). If "False", complete the Change of Ownership Addendum (Addendum F)
TRUE FALSE
c) Loan proceeds are not being used to finance real estate acquisition, construction, renovation or
improvements of a building that will contain rental space.
TRUE FALSE
If "False", complete the Leased Space Addendum (Addendum G)
d) Loan proceeds are not being used to build in a coastal barrier resource system (compliant with the Coastal Barrier Act). If "False", discuss in an attached "Comments" page
TRUE
FALSE
e) Loan proceeds are not being used to affect a property included or eligible to be included in the National
Register of Historic Places?
If "False", discuss in an attached "Comments" page
TRUE FALSE
Ineligible Uses of Proceeds -- The following are ineligible uses of proceeds.
To repay delinquent IRS withholding taxes, sales taxes or similar funds held in trust. To provide or refinance funds used for payments, distributions, or loans to Associates of the Applicant,
except payment of ordinary compensation for services rendered at a fair and reasonable rate. Relocation of the business out of a community if there will be a net reduction of one-third of its jobs or a
substantial increase in unemployment in any area of the country unless the relocation is for key economic reasons crucial to the applicant and the benefits to the applicant and the receiving community outweigh the negative impact on the community from which the applicant is moving. Community improvements, such as curbs and sidewalks, in excess of 5 percent of construction proceeds of this loan.
The loan request does not include any of the above ineligible uses of proceeds. If "False", the loan request is ineligible.
TRUE FALSE
XII. Terms of the Loan -- SBA has restrictions on the guaranty percentage, loan maturity, interest rate and total loan
amount. If "False" is checked for any of the statements below, the loan request is not eligible as submitted.
a) Maximum Guaranty Percentage: The SBA maximum guaranty percentage is 85% for loans of $150,000 or
less and 75% for loans over $150,000 (except for EWCP and International Trade Loans which have a 90%
maximum guaranty).
The requested guaranty percentage is within these parameters.
TRUE FALSE
b) Loan Amount: The maximum gross loan amount made within 90 days to the applicant (including affiliates)
cannot exceed $5 million.
The requested loan amount is within this limit.
TRUE FALSE
c) Aggregate Guaranty Amount: The aggregate guaranty amount of the SBA portions for this application and
all outstanding loans to Applicant and its affiliates cannot exceed $3.75 million ($4.5 million for EWCP and
International Trade loans).
The aggregate guaranty amount is within this limit.
TRUE FALSE
*Note: For International Trade loan, the maximum SBA guaranty amount for any working capital component of the IT loan combined with any other outstanding EWCP or 7(a) loan cannot exceed $4 million.
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d) Maturity: The maturity of the loan must be the shortest appropriate term consistent with the Applicant's repayment ability AND the useful life of the asset(s) being financed. The maximum maturities are as follows:
Working Capital or Inventory - up to 10 years (with sufficient justification) Equipment, Fixtures or Furniture - generally not more than 10 years, but allowable up to 25 years, and
not to exceed the useful economic life of the acquired asset(s) Real Estate - 25 years, plus the additional time needed to complete construction Refinancing - based on the use of proceeds of the loan(s) being refinanced Mixed Purposes - the blended maturity based on the use of proceeds, or up to the maximum for the
asset class comprising the largest percentage of the use of proceeds
The requested loan term is within these limits.
TRUE FALSE
e) Interest Rate: A loan may have a fixed or variable interest rate. The maximum interest rate that may be established for any 7(a) loan is governed by SBA's regulations on interest rates, which preempt any provisions of a state's constitution or law. The lender negotiates the interest rate with the Small Business Applicant, subject to SBA's maximum rates.
Loan Amount
Maturity
Maximum Rate
Loans $25,000 or less Loans $25,000 or less Loans more than $25,000 up to $50,000 Loans more than $25,000 up to $50,000 Loans greater than $50,000 Loans greater than $50,000
(Maturity less than 7 years) (Maturity 7 years or more) (Maturity less than 7 years) (Maturity 7 years or more) (Maturity less than 7 years) (Maturity 7 years or more)
Base Rate + 4.25% Base Rate + 4.75% Base Rate + 3.25% Base Rate+ 3.75% Base Rate + 2.25% Base Rate + 2.75%
Variable Base Rate: For variable rate loans, the Base Rate can be either: 1. The Prime Rate printed in a national financial newspaper published each business day, 2. LIBOR One Month Rate plus 3 percent (LIBOR), or 3. SBA's optional Peg Rate (PEG).
Fixed Base Rate: For fixed rate loans, the Base Rate must be SBA's Fixed Base Rate.
The rate used is the one in effect on the date SBA receives the complete application.
For current rates, please visit
The requested interest rate is within these parameters.
TRUE FALSE
XIII. Conflicts of Interest -- Due to potential conflicts of interest, in certain circumstances loans may require a higher
approved level within SBA. There may be a conflict of interest if:
An SBA employee, or the household member* of an SBA employee, is a sole proprietor, partner, officer, director or owner of 10 percent or more interest in the Applicant. [13 CFR 105.204]
A former SBA employee separated from SBA for less than one year prior to the request for financial assistance is an employee, partner, attorney, agent, owner of stock, officer, director, creditor or debtor of the Applicant. [13 CFR 105.203]
A member of Congress, or an appointed official or employee of the legislative or judicial branch of the Federal Government (or a household member of such an individual), is a sole proprietor, general partner, officer, director or has a 10 percent or more ownership interest in the Applicant business. [13 CFR 105.301(c)]
A member, or employee of, a Small Business Advisory Council, or a SCORE volunteer (or a household member of such an individual), is a sole proprietor, general partner, officer, director, or has a 10 percent or more ownership interest in the Applicant business. [13 CFR 105.302(a)]
*A "household member" of an SBA employee includes: a) the spouse of the SBA employee; b) the minor children of said individual; and c) the blood relatives of the employee, and the blood relatives of the employee's spouse, who reside in the same place of abode as the employee. [13 CFR 105.201(d)]
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