{"data":{"id":"us/13-cfr-120.110","jurisdiction":"us","citation":"13 CFR 120.110","heading":"What businesses are ineligible for SBA business loans?","body":"The following types of businesses are ineligible:\n(a) Non-profit businesses (for-profit subsidiaries are eligible);\n(b) 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);\n(c) 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);\n(d) Life insurance companies;\n(e) Businesses located in a foreign country (businesses in the U.S. owned by aliens may qualify);\n(f) Pyramid sale distribution plans;\n(g) Businesses deriving more than one-third of gross annual revenue from legal gambling activities;\n(h) Businesses engaged in any activity that is illegal under Federal, State, or local law;\n(i) Private clubs and businesses which limit the number of memberships for reasons other than capacity;\n(j) Government-owned entities (except for businesses owned or controlled by a Native American tribe);\n(k)- (l) [Reserved]\n(m) Loan packagers earning more than one third of their gross annual revenue from packaging SBA loans;\n(n) Businesses with an Associate who is currently incarcerated, serving a sentence of imprisonment imposed upon adjudication of guilty, or is under indictment for a felony or any crime involving or relating to financial misconduct or a false statement;\n(o) Businesses in which the Lender or CDC, or any of its Associates owns an equity interest;\n(p) Businesses which:\n(1) Present live performances of a prurient sexual nature; or\n(2) 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;\n(q) 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;\n(r) Businesses primarily engaged in political or lobbying activities; and\n(s) Speculative businesses (such as oil wildcatting).","path":["Title 13—Business Credit and Assistance","CHAPTER I—SMALL BUSINESS ADMINISTRATION","PART 120—BUSINESS LOANS","Subpart A—Policies Applying to All Business Loans"],"source_url":"https://www.ecfr.gov/api/versioner/v1/full/2026-08-25/title-13.xml","current_through":"2026-08-25","vintage":"","retrieved_at":"2026-08-27T02:24:18Z","sha256":"c35718f8d69fb8b4ab27b869b4c776a59b1a2aea865101b8e53ad9479db38cb3","source_id":"us-cfr","stale":true,"prev":"us/13-cfr-120.105","next":"us/13-cfr-120.111"},"notice":"GroundRules: Original legal text. Not legal advice."}