For SBA lenders
Short answer
A business is ineligible if it derives 50% or more of its gross revenue from passive activities like renting real estate or other passive investments, unless it also provides substantial services to tenants.
The SBA's 7(a) program is designed to support operating businesses. Passive businesses, such as those whose primary function is owning and leasing property without significant active management or services, are generally ineligible. This ensures the loan supports job creation and economic growth through active business operations.
An applicant seeks a 7(a) loan for a business that owns a multi-unit apartment building and only collects rent. The lender would deem this ineligible as a passive real estate business. However, if the business also provides daily maintenance, security, and concierge services, it could be eligible.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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