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Sunday, December 14, 2008

Daily Observation - Small Business Defined

As we continue to wait for the new SBA rules and regulations to be enacted. As we also wait to see what if any of the economic stimulus plan will be adopted. As we wait to find out how the economic stimulus plan will affect future SBA funding and as we wait to see if the Secondary Market will return I wanted to address what qualifies as a Small Business under the SBA guideline.

SBA defines a small business as one that is independently owned and operated and not dominant in its field. A small business must also meet the employment or sales standards developed by the Small Business Administration and based on the North American Industry Classification System (NAICS).

In general, the following criteria are used by SBA to determine if a concern qualifies as a small business and is eligible for SBA loan assistance:

• Wholesale - not more than 100 employees;
• Retail or Service - Average (3 year) annual sales or receipts of not more than $6.0 million to $29.0 million, depending on business type;
• Manufacturing - Generally not more than 500 employees, but in some cases up to 1,500 employees;
Construction - Average (3 year) annual sales or receipts of not more than $12.0 million to $28.5 million, depending on the specific business type.

Even though the SBA-qualifying standards are more flexible than other types of loans, lenders will generally ask for certain information before deciding to use an SBA loan program. Visit our website loanforbiz to see what additional documentation is needed and to see if your business qualifies as an SBA Eligible business. Remember Non-Profits do not qualify for any SBA Financing.

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