Glossary · The loan itself
Eligibility Rule
In short
Specific criteria established by the SBA that both the borrower and the business must meet to qualify for a 7(a) loan. These rules cover everything from business type to owner citizenship.
What it means in a deal
Before investing significant time and money, ensure both you and the target business comply with all SBA Eligibility Rules. Common pitfalls include businesses on the ineligible list (e.g., passive businesses, non-profits) or owners failing citizenship/credit requirements. Your lender will rigorously check these before approving your loan.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Eligibility Rule
- How does the 'franchise rule' affect affiliation calculations for SBA 7(a) eligibility?
- How does the SBA define 'active ownership' for the 24-month rule?
- How does the 'not engaged in lending' rule apply to a loan applicant?
- What is the 24-month ownership rule for a $0-down SBA partner buyout?
- How does the SBA define 'total control' rule to determine affiliation for size standards?
- How does the SBA's "all available collateral" rule apply when business assets are limited?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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