A business or other organization whose primary goal is making money (a profit), as opposed to a non-profit organization which focuses on a goal, such as helping the community and is concerned with money only as much as necessary to keep the organization operating. The business must be a sole proprietorship, partnership, limited liability company, or corporation.
The business must be small as defined by SBA as those businesses with a net worth below $15 million and an average net profit (after taxes) for the last two years of below $5 million. If these standards are exceeded, the business can still qualify for the program by meeting other SBA size standards based on either number of employees or annual revenue, depending upon the industry.
The business must do business in the United States or its possessions. Ownership must be comprised of 51% U.S. citizens or registered aliens with green card.
For funding projects that include real estate, the business must intend to occupy at least 51% of the ‘Rentable Property’ for existing structures or at least 60% of the ‘Rentable Property’ initially (and 80% over time) for new construction projects. “Rentable Property” is the total square footage of all buildings or facilities used for business operations, which may include exterior space (except parking areas) that is actively used in the Borrower’s business operations.
The small business must meet the job creation/retention requirement or qualify for a waiver. The general requirement is one job per $75,000 in SBA funding for typical 504 loans, or one job per $120,000 for small manufacturers. If a business does not meet the job creation/retention goals of the SBA, they may qualify for the program under one of the other goals of the program.