Question

EXERCISE Many small-business owners have a difficult time finding financing to start or expand their business. The Small Business Administration is one potential source of financing for many types of small businesses, but there are also some businesses that do not qualify for SBA loans. Go to sba.gov, search for 7(a) loan program eligibility," and see whether the following businesses are eligible to apply for SBA financing: 1. Growing Like a Weed is a lawn-care business that needs funding to buy additional equipment in order to expand. Does it meet SBA criteria? Why or why not? 2. Glamour Galore is a cosmetic company that pays sales commissions based on a system that depends on salespeople recruiting additional salespeople. It needs funding to build a marketing campaign. Does it meet SBA criteria? Why or why not? 3. Glory Days is a senior day care center operated by a local church. It needs funding to remodel the center's kitchen and install an elevator to make the building accessible to those in wheelchairs. Does it meet SBA criteria? Why or why not? 4. Lettuce Entertain U is a company needing funding to remodel an old warehouse to house its latest vegan restaurant. Does it meet SBA criteria? Why or why not? RE

Answer 1

1. Growing weed is illegal and as per Regulation 7(A) the businesses engaged in illegal activities are not eligible for loan.

Therefore, the answer is not eligible as it is illegal.

2. Glamour Galore is a cosmetic company and it is specifically mentioned in the list of ineligible businesses.It would constitute Pyramid sales plan and hence it is also ineligible.

3. Day care centre is being operated by a local church and loan to organizations promoting religious activities is not allowed .Therefore the answer is not eligible.

4. THis company would be covered under the definition of AEligible Passive company and hence it will be granted loan.

Therefore, the answer is yes