Article by Roger Schlueter, MBA
Most Business People think that if you are not a citizen, then you cannot get a Small Business Loan though the Small Business Administration. This is a misnomer but the Small Business Administration does not make it an easy process. I am going to give the General Rules but the SBA’s SOP (Standard Operating Procedure ) covers the process in much more detail.
The bank when filling out the paperwork for a SBA Loan will hopefully also fill out the SBA Loan Eligibility Form. This form asks if all the principals are U.S. Citizens. If the answer if false, the banker needs to fill out the Alien Ownership Eligibility Addendum (Addendum A ). This Form asks several questions in a, Yes or NO format.
1) If you are an Undocumented ( illegal ) alien, you are NOT ELIGIBLE FOR SBA FINANCING.
A) If you are A DOCUMENTED ALIEN, then you must obtain USCIS Verification of the Status of the documented alien using USCIS Form G-845. You can Submit this USCIS Verification to the SBA with the Application. Electronic Verification is Available by E-Mail to SacramentoAlienVerification@SBA.gov
2) Is the business at least 51% owned by individuals who are either U.S. Citizens or have Legal Permanent Resident (LPR) Status and who control the management & daily operations of the business. If Box Checked then the applicant is not subject to additional requirements:
i) The application must contain assurance that management is expected to continue in place indefinitely and has U.S. citizenship or verified LPR status.
ii) Management must have operated the business for at least 1 year prior to the application date
iii) Management must provide a personal guaranty, unless the Lender’s Credit Memo explains why this guaranty is not needed, and
iv) Collateral is pledged that is sufficient to pay the loan in full at any time.
These USCIS Verification and Alien Ownership Requirements need to be met. The loan will be ineligible until they are met.
3) If the Applicant is a Foreign-Owned Business then the Applicant needs to comply with the following:
Be located in the U.S.,
Operate primarily within the U.S.,
Pay taxes to the U.S.,
Use loan proceeds exclusively for the benefit of the domestic operations
Use American products, materials and labor
Separate continual and consistent management of the business has been provided by a U.S. citizen or by a verified LPR and will continue indefinitely
Management has operated the business for at least 1 year prior to the application date
Management will provide a personal guaranty, unless the Lender’s Credit Memo explains why this guaranty is not needed, and
Collateral is pledged that is sufficient to pay the loan in full at any time
This is not an End-All for Non-Citizen obtaining a SBA Loan. The absolute End-All is given in the SBA’s SOP under the Subpart B, Chapter 2, III. Eligibility Requirements, E. Businesses Owned by Non-Citizens. The SOP devotes five pages to this subject.
Please address any questions or comments to roger@rogerschlueter.com or visit my website at schlueterfinancial.com