Business Loan Eligibility

Running head: LOAN ELIGIBILITY 1

LOAN ELIGIBILITY 3

Loan eligibility

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Loan eligibility

There are certain requirements that a business must fulfill in order to qualify for Small Business Administration (SBA) loans. To be eligible, the business must be profit-oriented, small, aspiring to run or is running a business in the United States. In addition, the business must have other finance resources and assets, before requesting for help. The equity invested by the business must also be rational (U.S. Small Business Administration, 2017). Additionally, the business must not owe any debt to the government. It must further illustrate why the loan is needed and be ready to spend the funds on a business objective that is substantive.

The bank chosen for interrogation about the requirements for a business loan was Bank of America. The bank is an international finance institution that offers non-banking and banking services to individuals and companies (CNN Money, 2017). It serves around 47 million clients. It was founded in 1904 and its head office is in North Carolina. Good enough, the bank offers loans guaranteed by SBA. The first question to the bank’s manager, was the bank’s guidelines for a loan. The response was that the person must own the business, be profit-oriented, and legal that is a partnership, limited liability company, sole proprietorship, or corporation. Furthermore, a business that borrows SBA loan is not eligible for conventional credit. The second question was the meaning of SBA loan. The response was that SBA is a government agency which helps established and new businesses. Notably, the business does not borrow directly from the company. Instead, it borrows from a finance institution that has partnered with the company to offer loans. The third question was the variation between the bank loans and SBA loan. In bank loans, the bank bears the loan risk. In SBA loan, both the company and the bank bear the loan risk. The last question was whether the bank was recognized by SBA. The response was that the bank met the SBA’s rules and was proficient in offering loans guaranteed by SBA. The bank’s maximum SBA loan limit is $3.5 million dollars.

References

CNN Money. (2017). Bank of America Corporation: Company description. Retrieved from http://money.cnn.com/quote/profile/profile.html?symb=BAC

U.S. Small Business Administration. (2017). 7(a) loan program eligibility. Retrieved from https://www.sba.gov/loans-grants/see-what-sba-offers/sba-loan-programs/general-small-business-loans-7a/7a-loan-program-eligibility