SBA Eligibility Pre-Check
The Gates
Whether a lender's program will have you gates the self-funded path before any deal exists. Answer these before you spend money on one.
A for-profit business operating in the United States
The business must operate for profit, in the US or its territories. Passive investment and speculation do not qualify.
Real estate held for appreciation and businesses that mostly lend money are out, even when they look like Main Street. So are apartment buildings and mobile home parks.
Source: SBA SOP 50 10 8.1
Small by SBA size standards
The business must fit its industry's size standard or SBA's alternative one. Most Main Street targets fit with room to spare.
The affiliation rule counts affiliates into the size test: if you already own other companies, their revenue and headcount can aggregate with the target's.
Source: SBA size standards
Every owner a US citizen or US national
Since March 1, 2026, 100% of direct and indirect ownership must be held by US citizens or US nationals with a principal residence in the US.
This gate changed twice in three months: a 5% foreign-ownership carve-out opened on January 1, 2026 and was rescinded on March 1, along with green-card holders, eligible until then. Any ineligible co-investor, at any percentage, fails the application, and so does one in the six months before the loan number unless fully divested first. Spouses' and minor children's stakes are combined.
Clean answers on the character questions
SBA Form 1919 asks the borrower whether any owner or officer is incarcerated, on parole or probation, or facing pending charges. Prison or a pending felony charge stops the file; parole or probation need not.
Old, resolved matters are usually workable with disclosure. The unworkable version is the undisclosed one the background check finds.
Source: SBA Form 1919
No delinquent federal debt, no prior loss to the government
Delinquent federal debt or a prior default that cost the government money (including a prior SBA loan) makes the applicant ineligible.
Defaulted federal student loans are the version of this that surprises buyers. Cure the delinquency before applying, not during.
Source: SBA SOP 50 10 8.1
A real 10% equity injection
An outright purchase needs at least 10% of total project cost, which no lender can reduce. A seller note counts only subordinated and on full standby for the loan's life, and with other standby money covers at most half of it.
A note paying interest only counts for nothing, nor does a personal loan unless it is to a guarantor and repaid from outside the business.
Source: SBA SOP 50 10 8.1
Enough SBA guaranty left, counting affiliates
The SBA guarantees at most $3,750,000 across all loans to one borrower and their affiliates. A top-size 7(a) uses that allowance in full, so a buyer who has already borrowed to the cap has no guaranteed capacity for a second business.
It aggregates with affiliates, tied by ownership since 2023, so an affiliate's SBA loan comes off your allowance first. Ask what is outstanding before you write an LOI on a second acquisition.
Source: 13 CFR 120.151
Franchises: the brand is in the SBA Franchise Directory
For any franchise, brand listing in the directory decides SBA eligibility. The directory came back on June 1, 2025 and is updated every other week.
Brands that missed recertification dropped off when the directory returned. Check the listing before the LOI, not during underwriting.
Source: SBA Franchise Directory
The Reading
0 of 8 gates answered. Answer them all for a reading; the unanswered ones are the ones lenders will ask about first.
Answers stay on this page and are not saved. The brief pastes your answers into the form a broker or lender first asks for.
Every Gate in Full, from SOP 50 10 8.1
A for-profit business operating in the United States
The business must operate for profit, in the US or its territories. Passive investment and speculation do not qualify.
Common trap: Real estate held for appreciation and businesses that mostly lend money are out, even when they look like Main Street. So are apartment buildings and mobile home parks.
SBA SOP 50 10 8.1Small by SBA size standards
The business must fit its industry's size standard or SBA's alternative one. Most Main Street targets fit with room to spare.
Common trap: The affiliation rule counts affiliates into the size test: if you already own other companies, their revenue and headcount can aggregate with the target's.
SBA size standardsEvery owner a US citizen or US national
Since March 1, 2026, 100% of direct and indirect ownership must be held by US citizens or US nationals with a principal residence in the US.
Common trap: This gate changed twice in three months: a 5% foreign-ownership carve-out opened on January 1, 2026 and was rescinded on March 1, along with green-card holders, eligible until then. Any ineligible co-investor, at any percentage, fails the application, and so does one in the six months before the loan number unless fully divested first. Spouses' and minor children's stakes are combined.
SBA Procedural Notice 5000-876626Clean answers on the character questions
SBA Form 1919 asks the borrower whether any owner or officer is incarcerated, on parole or probation, or facing pending charges. Prison or a pending felony charge stops the file; parole or probation need not.
Common trap: Old, resolved matters are usually workable with disclosure. The unworkable version is the undisclosed one the background check finds.
SBA Form 1919No delinquent federal debt, no prior loss to the government
Delinquent federal debt or a prior default that cost the government money (including a prior SBA loan) makes the applicant ineligible.
Common trap: Defaulted federal student loans are the version of this that surprises buyers. Cure the delinquency before applying, not during.
SBA SOP 50 10 8.1A real 10% equity injection
An outright purchase needs at least 10% of total project cost, which no lender can reduce. A seller note counts only subordinated and on full standby for the loan's life, and with other standby money covers at most half of it.
Common trap: A note paying interest only counts for nothing, nor does a personal loan unless it is to a guarantor and repaid from outside the business.
SBA SOP 50 10 8.1Enough SBA guaranty left, counting affiliates
The SBA guarantees at most $3,750,000 across all loans to one borrower and their affiliates. A top-size 7(a) uses that allowance in full, so a buyer who has already borrowed to the cap has no guaranteed capacity for a second business.
Common trap: It aggregates with affiliates, tied by ownership since 2023, so an affiliate's SBA loan comes off your allowance first. Ask what is outstanding before you write an LOI on a second acquisition.
13 CFR 120.151Franchises: the brand is in the SBA Franchise Directory
For any franchise, brand listing in the directory decides SBA eligibility. The directory came back on June 1, 2025 and is updated every other week.
Common trap: Brands that missed recertification dropped off when the directory returned. Check the listing before the LOI, not during underwriting.
SBA Franchise Directory
Sourced from SOP 50 10 8.1 (effective October 1, 2026) and the ownership Procedural Notice (effective March 1, 2026). These rules change; confirm the current text with your lender before an offer.
A gate that closes the loan does not close the purchase. A buyer who is not a US citizen or national, a Canadian included, can still buy a US business with cash, a bank lending without the guaranty or the seller's own financing, the routes in Buying Without an SBA Loan. Living in the US to run it is a separate immigration question.