This post is part of a series of posts designed to help you acquire a loan for your small business. The following posts cover methods for public financing of your small business

U.S. Small Business Administration (SBA)

The Small Business Administration (SBA) has financial assistance programs which provide access to debt and equity primarily from banks or other private sources. The various types of SBA financing programs are briefly explained below. The qualifications for these programs change from time to time, and it is recommended that you check with SBA for the most recent criteria.

SBA evaluates each loan application on two levels. The first is for eligibility which varies by industry and SBA program. The second evaluation is based on the credit merits of the application. The SBA uses the North American Industry Classification System (NAICS) instead of SIC codes for this purpose. For information about the NAICS and tables see the SBA’s website.

Small Business Administration (SBA)
210-C Butler Square Building
100 North Sixth Street
Minneapolis, MN 55403
(612) 370-2324


Eligible Applicants-Size Standards. SBA’s size standards for eligibility are based on the North American Industry Classification System (NAICS). The size standards table applies to most of SBA’s programs and to many other federal government programs and actions where eligibility as a small business is a factor or consideration. SBA’s Table of Small Business Size Standards can be accessed at .

Ineligible Applicants. Most small businesses in Minnesota are eligible for SBA financial assistance, provided they are independently owned and operated, are not dominant in their field and can show that they are unable to obtain private financing on reasonable terms without SBA assistance. The Small Business Act, however, does exclude certain businesses, namely the following:

Ineligible Businesses And Eligible Passive Companies

Businesses ineligible for SBA business loans

The following types of businesses are ineligible:

  • Non-profit businesses (for-profit subsidiaries are eligible);
  • Financial businesses primarily engaged in the business of lending, such as banks, finance companies, and factors (pawn shops, although engaged in lending, may qualify in some circumstances);
  • Passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds (except Eligible Passive Companies under § 120.111);
  • Life insurance companies;
  • Businesses located in a foreign country (businesses in the U.S. owned by aliens may qualify);
  • Pyramid sale distribution plans;
  • Businesses deriving more than one-third of gross annual revenue from legal gambling activities;
  • Businesses engaged in any illegal activity;
  • Private clubs and businesses which limit the number of memberships for reasons other than capacity;
  • Government-owned entities (except for businesses owned or controlled by a Native American tribe);
  • Businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting;
  • Consumer and marketing cooperatives (producer cooperatives are eligible);
  • Loan packages earning more than one third of their gross annual revenue from packaging SBA loans;
  • Businesses with an associate who is incarcerated, on probation, on parole, or has been indicted for a felony or a crime of moral turpitude;
  • Businesses in which the lender or CDC, or any of its associates owns an equity interest;
  • Businesses which:
  • Present live performances of a prurient sexual nature; or
  • Derive directly or indirectly more than de minimis gross revenue through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature;
  • Unless waived by SBA for good cause, businesses that have previously defaulted on a federal loan or federally assisted financing, resulting in the federal government or any of its agencies or departments sustaining a loss in any of its programs, and businesses owned or controlled by an applicant or any of its associates which previously owned, operated, or controlled a business which defaulted on a federal loan (or guaranteed a loan which was defaulted) and caused the federal government or any of its agencies or departments to sustain a loss in any of its programs. For purposes of this section, a compromise agreement shall also be considered a loss;
  • Businesses primarily engaged in political or lobbying activities; and
  • Speculative businesses (such as oil wildcatting).

Credit Merits

The SBA places its primary emphasis for loan consideration on the demonstrated ability of the business to repay all business-related debt, including the new loan obligation. Additionally, a reasonable “at stake” equity injection by the applicant is required. Each application is individually considered based on earnings potential, collateral, track record and/or projections, management, and the type of businesses in the same field. While SBA’s standards are designed to be more relaxed than those of commercial lenders the SBA will not approve loans to businesses with unsatisfactory profit history, inadequate equity investment, unsupported projections, or, unacceptable credit histories.

SBA Loan Programs

SBA’s four basic loan programs are as follows:

  • Guaranteed Loans
    • Regular Guaranteed Loans
      • International Trade
      • Express
      • Patriot Express Loan
      • Small and Rural Advantage
      • Community Express
    • Short-term Guaranteed Loans
      • Contract Loan Program
      • Seasonal Line of Credit
      • Export Working Capital Program
      • Asset-based
      • Floor Planning Loans
    • Certified Development Company Loans or 504 Loan Program
    • Small Business Investment Companies
    • Microloans