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EXERCISE Many small-business owners have a difficult time finding financing to start or expand their business. The Small Busi
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As per the website of SBA, the criteria for business to be eligible under "7(a) Loan Program" are broadly :

a) they must operate for profit; b) must be engaged in (or propose to engage) in business in the US or its territories; c) must have reasonable equity capital participation by the owner/promoter and d) must use alternative means to finance (including personal assets) before seeking any financial assistance.

A cursory reading of these conditions leaves the impression that these conditions are mandatory and must be met by any business seeking loan under this program. Further, in addition to these conditions, there are exemplary guidelines which takes into account special considerations and hints where exceptional consideration may be made and a business may be considered eligible under the program. On the other hand, there are also exemplary guidelines which specify circumstances under which the business which would have been eligible for availing this loan program facility would be disqualified.

1) Growing Like a Weed who is into a lawn-care business and needs to buy additional equipment to expand appears eligible under the 7(a) loan program. This business meets all 4 conditions of being in business for profit within US and its owners have already invested into its business  and appear to have explored alternative means for financing. It is not clear whether this business shall fall under "Special Consideration" of "Farms and agricultural business", If it falls under this category, then it needs to first explore Farm Service Agency (FSA) program if it already had a prior or existing relationship with FSA. Therefore, prima facie, this business appear eligible subject to meeting further the conditions under special consideration if applicable.

2) Glamour Galore (cosmetic company) is not eligible under 7(a) loan program as its business model of Pyramid sales plans is clearly specified under "Ineligible Business". Its business model/structure is based on Pyramid sales plans (or Network marketing) where most of incremental sales comes from the process of recruitment of additional salespersons who become members or sales persons by buying the products and increasing the chain of salespersons below them.

3) Glory Days (senior day care center) is also not eligible under 7(a) loan program as it falls under "Ineligible Business" it is operated by a local church. As per the last exemplary guideline under "Ineligible Business", institutions run by church which primarily promotes religious objectives, this center is not eligible business under the loan program.

4) On the face of it, Lettuce Entertain U appears to meet all four criteria prescribed for 7(a) Loan Program. However, if we are considering Lettuce Entertain You, then it is fairly large company having multiple restaurants at various locations. It has more than 100 restaurants and thousands of employees. It does not appear to be carrying out the business which can be categorized as "small business" for which 7(a) loan programs are intended and designed.

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