13 C.F.R. § 120.110

What businesses are ineligible for SBA business loans?

Read at: eCFRecfr.gov CornellLII GovInfogovinfo.gov CasesGoogle Scholar

The following types of businesses are ineligible:

(a) Non-profit businesses (for-profit subsidiaries are eligible);

(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);

(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);

(d) Life insurance companies;

(e) Businesses located in a foreign country (businesses in the U.S. owned by aliens may qualify);

(f) Pyramid sale distribution plans;

(g) Businesses deriving more than one-third of gross annual revenue from legal gambling activities;

(h) Businesses engaged in any activity that is illegal under Federal, State, or local law;

(i) Private clubs and businesses which limit the number of memberships for reasons other than capacity;

(j) Government-owned entities (except for businesses owned or controlled by a Native American tribe);

(k)- (l) [Reserved]

(m) Loan packagers earning more than one third of their gross annual revenue from packaging SBA loans;

(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;

(o) Businesses in which the Lender or CDC, or any of its Associates owns an equity interest;

(p) Businesses which:

(1) Present live performances of a prurient sexual nature; or

(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;

(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;

(r) Businesses primarily engaged in political or lobbying activities; and

(s) Speculative businesses (such as oil wildcatting).

[61 FR 3235, Jan. 31, 1996, as amended at 82 FR 39502, Aug. 21, 2017; 87 FR 38908, June 30, 2022; 89 FR 34101, Apr. 30, 2024]

Notes of Decisions

Cited in 25 cases (13 in the last 5 years), 2020–2026 · leading case: Camelot Banquet Rooms, Inc. v. United States Small Business A

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Camelot Banquet Rooms, Inc. v. United States Small Business A (2022) ca7 · cites it 7× “§ 636 (a)(37)(A)(iv)(III)(aa), incorporating 13 C.F.R. § 120.110 , with two exceptions.”

Camelot Banquet Rooms, Inc. v. United States Small Business A (2021) ca7 · cites it 6× “§ 636 (a)(37)(A)(iv)(III)(aa), incorporating 13 C.F.R. § 120.110 , with two exceptions.”

Pharaohs GC, Inc. v. United States Small Business Administration (2021) ca2 · cites it 2× “at 20,812 (incorporating 13 C.F.R. § 120.110 , restrictions on eligibility for certain 11 “types of businesses”).”

Camelot Banquet Rooms Inc v. United States Small Business Administration (2021) wied · cites it 19× “” 13 C.F.R. § 120.110 (p). I reasoned that Congress had not authorized the SBA to apply this regulation to the PPP and that, even if it had, denying the plaintiffs access to the PPP because they offered a form of entertainment protected by the First Amendment would be…”

National Association of Home Builders v. United States Small Business Administration (2021) mied · cites it 9× “The first interim final rule, which the plaintiffs in this case challenge, was issued on April 2, 2020 and states, as relevant to this case: “Businesses that are not eligible for PPP loans are identified in 13 CFR § 120.110 and described further in SBA’s Standard Operating…”

Pharaohs GC, Inc. v. United States Small Business Administration (2020) nywd · cites it 8× “The bank to which Pharaohs applied for such a loan denied it because businesses that “[p]resent live performances of a prurient sexual nature” are ineligible under 13 C.F.R. § 120.110 (p). Docket Item 1 ¶ 45.”

DV Diamond Club of Flint, LLC v. Small Business Administration, an agency of the United States (2020) mied · cites it 5× “The Original SBA Ineligibility Rule is codified at 13 C.F.R. § 120.110 . The rule prohibits “banks,” “[l]ife insurance companies,” “businesses primarily engaged in political or lobbying activities,” “[b]usinesses deriving more than one-third of gross annual revenue from legal…”

Camelot Banquet Rooms, Inc. v. Carranza (2020) wied · cites it 4× “See 13 C.F.R. § 120.110 (p). The plaintiffs promptly commenced these actions against the United States, Treasury Secretary Steven Mnuchin, the SBA, and SBA Administrator Jovita Carranza, and filed motions for a temporary restraining order and preliminary injunction.”

J.R. Schuster LLC v. United States Small Business Administration (2020) wied · cites it 4× “See 13 C.F.R. § 120.110 (p). The plaintiffs promptly commenced these actions against the United States, Treasury Secretary Steven Mnuchin, the SBA, and SBA Administrator Jovita Carranza, and filed motions for a temporary restraining order and preliminary injunction.”

McCarthy v. Cuomo (2020) nyed · cites it 3× “” 13 C.F.R. § 120.110 (p). III. The Plaintiffs’ Business Sean McCarthy owns and operates Blush Gentleman’s Club (“Blush”), a restaurant, bar and gentleman’s club located in Commack, New York.”

Carmen's Corner Store v. Small Business Administration (2020) mdd · cites it 2× “See 13 C.F.R. § 120.110 (n). That regulation provides that “[b]usinesses with an Associate2 who is incarcerated, on probation, on parole, or has been indicted for a felony or a crime of moral turpitude” are ineligible for SBA business loans.”

Defy Ventures, Inc. v. United States Small Business Administration (2020) mdd · cites it 2× “See 13 C.F.R. § 120.110 (n). That regulation provides that “[b]usinesses with an Associate2 who is incarcerated, on probation, on parole, or has been indicted for a felony or a crime of moral turpitude” are ineligible for SBA business loans.”

Show all 25 citing cases →

— 13 C.F.R. § 120.110(g) — 2 cases

National Association of Home Builders v. United States Small Business Administration (2021) mied “The first interim final rule, which the plaintiffs in this case challenge, was issued on April 2, 2020 and states, as relevant to this case: “Businesses that are not eligible for PPP loans are identified in 13 CFR § 120.110 and described further in SBA’s Standard Operating…”

Camelot Banquet Rooms Inc v. United States Small Business Administration (2021) wied “” 13 C.F.R. § 120.110 (p). I reasoned that Congress had not authorized the SBA to apply this regulation to the PPP and that, even if it had, denying the plaintiffs access to the PPP because they offered a form of entertainment protected by the First Amendment would be…”

— 13 C.F.R. § 120.110(n) — 1 case

Carmen's Corner Store v. Small Business Administration (2021) mdd

— 13 C.F.R. § 120.110(p) — 1 case

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