Understanding SBA Eligibility Determination
Before any lender underwrites the deal, an SBA eligibility determination has to be made. Failing this step is rare but consequential — and the rules are not always intuitive. Knowing the major eligibility gates helps you avoid wasting time on a structure the SBA will not allow.
Size Standards
The SBA limits eligibility to small businesses, measured by industry-specific size standards based on either average annual revenue or employee count. Most small businesses qualify easily, but larger middle-market companies sometimes find they have outgrown SBA eligibility.
Affiliation Rules
Affiliation rules require the SBA to consider the revenue and employees of related companies. If you own multiple businesses, the size standards apply to the combined group, not just the applicant.
Ineligible Industries
Passive investment businesses (most rental real estate held purely for investment), gambling-related businesses, businesses primarily engaged in lending, religious organizations, and certain speculative businesses are ineligible. The list is more nuanced than a single sentence — confirm with your lender if your industry is unusual.
Citizenship and Ownership
U.S. citizens and lawful permanent residents qualify. Visa holders generally do not. Foreign nationals can sometimes be co-borrowers under specific structures, but the lead borrower must be a U.S. citizen or LPR.
Educational content only — not advice. KQT Advisors, LLC is a commercial loan broker; we are not a lender, attorney, accountant, financial advisor, or fiduciary. We do not originate loans or make lending decisions. The information in this article is provided strictly for general informational and educational purposes and reflects our understanding at the time of writing. It is not — and must not be construed as — financial, tax, legal, accounting, investment, or any other professional advice, and creates no advisor-client relationship. Loan programs, rates, terms, eligibility requirements, fees, and approval criteria are set by individual lenders, the SBA, and other parties and are subject to change at any time without notice. Examples are illustrative only and not guarantees of outcome. Nothing here is a commitment to lend, an offer of credit, or a representation that any specific structure will be available to or appropriate for any borrower. Always consult your own qualified financial, tax, and legal advisors before acting on any information in this article. To the maximum extent permitted by law, KQT Advisors, LLC and its principals, employees, agents, and affiliates disclaim all liability for any direct, indirect, consequential, or incidental loss or damage arising out of any use of, reliance on, or inability to use the information in this article.