SBA SOP 50 10 8, A.Ch1.E.4 — Life insurance carriers are not eligible. 13 CFR § 120.110(d)
Verbatim text of SBA SOP 50 10 8 section A.Ch1.E.4 (Life insurance carriers are not eligible. 13 CFR § 120.110(d)), effective 2025-06-01. 6 provision(s) quoted from the SOP PDF. SBA's own document page serves superseded editions, and the SOP is further amended by policy notices — read this with the notices that touch it.
Verbatim regulatory text
Verbatim provisions from SBA SOP 50 10 8, A.Ch1.E.4 — Life insurance carriers are not eligible. 13 CFR § 120.110(d) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
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4. Life insurance carriers are not eligible. 13 CFR § 120.110(d) 5. Businesses located in a foreign country are not eligible. (See Paragraph F below for additional restrictions on Borrower ownership). 13 CFR § 120.110 (e) 6. Businesses using pyramid or multilevel sales distribution plans are not eligible. 13 CFR § 120.110(f) 7. Businesses that obtain more than one-third of their annual gross revenue for the prior year, including rental income, from legal gambling activities are not eligible. 13 CFR § 120.110(g) If the purpose of the business is gambling, such as a pari-mutuel betting racetrack or a gambling casino, the business is not eligible, regardless of the percentage of gross revenue derived from gambling. Circumstances exist in which businesses engaged in legal gambling activities may be eligible, including if the Applicant obtains one-third or less of their annual gross revenue, including rental income from: i. Commissions from official State lottery ticket sales under a State license; or
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ii. Gambling activities licensed and supervised by a state authority in those states where the activities are legal. 8. Businesses that are engaged in any activity that is illegal under federal, state, or local law are not eligible. 13 CFR § 120.110 (h) Applicants that are engaged in illegal activity under federal, state, or local law are not eligible. This includes Applicants who make, sell, service, distribute, or promote products or services used in connection with illegal activity, unless such use can be shown to be completely outside of the Applicant’s intended market. If the business sells products made from hemp or CBD or devices associated with consuming marijuana, the SBA Lender is responsible for obtaining from the Applicant documentation sufficient to demonstrate that the products sold by the business are not illegal under federal, state, or local laws. Marijuana: Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity. Therefore, businesses that derive revenue from marijuana-related activities may be ineligible for SBA financial assistance. The nature of the business’s specific operations determines whether a business is eligible. The following businesses are ineligible: a business that grows, produces, processes, distributes, or sells marijuana or marijuana products, edibles, or derivatives, regardless of the amount of such activity. This also includes businesses that sell smoking devices, pipes, bongs, inhalants, or other products if the products are primarily intended or designed for marijuana use or if the business markets the products for such use. This applies to recreational use and medical use even if the business is legal under local or state law where the Applicant is or will be located. Hemp: Consistent with the Agriculture Improvement Act of 2018 (Public Law No. 115-334), a business that grows, produces, processes, distributes or sells products made from hemp is eligible only if the hemp meets the definition in section 297A of the Agricultural Marketing Act of 1946 and any applicable state definition of hemp. (It is important to note that some states define hemp as having a lower level of THC than the federal definition.) The SBA Lender is responsible for obtaining from the Applicant documentation sufficient to demonstrate that the hemp meets the applicable definitions. In addition, for Applicants who will be growing, producing, and/or processing hemp, the SBA Lender is responsible for obtaining from the Applicant documentation of the testing protocols the business will follow to ensure that the hemp and any product(s) they extract or produce from it continue to meet the applicable definitions. Cannabidiol (CBD): The factors to be considered in determining the eligibility of CBD-related businesses include, but are not limited to, the following: i. Where the CBD is derived from (whether from hemp or marijuana);
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ii. What types of products are being produced and/or sold (e.g., topical products or products to be ingested). Based on FDA guidance, it is illegal under the Food, Drug, & Cosmetic Act to add CBD to any food (human or animal), any dietary supplements, and certain cosmetics because cannabidiol is the active ingredient of an FDA-approved drug and has not been approved for other use. Please refer to FDA Regulation of Cannabis and Cannabis-Derived Products, Including Cannabidiol (CBD); iii. What health claims, if any, are being made about the product(s); and
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iv. Whether all products being produced and/or sold comply with all applicable federal, state, and local laws and regulations, including those issued by the FDA. v. The SBA Lender is responsible for obtaining from the Applicant documentation sufficient to demonstrate that the products containing CBD being sold by the Applicant comply with all applicable federal, state, and local laws and regulations, including necessary certificates of lab analysis. 9. Businesses that restrict patronage for any reason other than capacity or that have discriminatory hiring practices are not eligible. 13 CFR §§ 120.110(i) and 113.3(a) Businesses that restrict patronage for any reason other than capacity are not eligible. For example, a men’s or women’s only health club is not eligible. Circumstances exist in which certain businesses, like fitness centers that market to one gender, may be eligible if they permit both men and women to join and/or use the facility. SBA Lenders must document the file with the following: i. Affidavit signed by the Applicant that the business is open to both men and women; and
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ii. Evidence that the facility is open to both men and women, such as appropriate bath/locker rooms, or documented membership demographics. Except as permitted under §702(a) of the Civil Rights Act of 1964 (42 U.S.C. § 2000e-1), businesses that have discriminatory hiring practices are not eligible. For example, a restaurant that employs only servers of one gender is not eligible. 10. Government-Owned Entities, except for businesses owned or controlled by a Native American tribe are not eligible. 13 CFR § 120.110(j) Businesses owned by municipalities and other political subdivisions are not eligible. Special Requirements Applicable to Native American Businesses: i. A Native American tribe is a Governmental entity and is not eligible. ii. A small business that is owned in whole or in part by a state or federally- recognized Native American Tribe may be eligible, provided the small business meets all other criteria set forth in SBA Loan Program Requirements and: a) Establishes that it is a separate legal entity from the tribe and submits the documents authorizing its existence; and b) For federally-recognized tribes, the tribe waives sovereign immunity with respect to the collateral pledged for the loan, and collection of the loan from the Applicant, AND agrees to a “sue and be sued” clause specifically naming U.S. Federal courts as “courts of competent jurisdiction.” (Note: Tribes that are recognized only by a state do not have sovereign immunity. Therefore, this requirement is not necessary if the tribe is only recognized by a state.) SBA Lenders may seek the advice and assistance of the Bureau of Indian Affairs (BIA) personnel when dealing with loans collateralized by Indian lands held in trust. 11. Loan Packagers, including Lender Service Providers, and other businesses earning more than one third of their gross annual revenue from packaging SBA loans are not eligible. 13 CFR § 120.110(m) 12. Businesses with an Associate who is currently incarcerated, serving a sentence of imprisonment imposed upon adjudication of guilty, or is under indictment for a felony or any crime involving or relating to financial misconduct or a false statement are ineligible. A business that is owned by an individual(s) who is currently on parole or probation may be eligible, but if the success of the business operations is primarily dependent on such individual, the Applicant must provide to the SBA Lender a plan for the continued operations of the business in the event of reincarceration, and the SBA Lender should consider whether it would be prudent, in order to protect SBA’s and the SBA Lender’s interests, to require an additional individual to provide a full or limited loan guaranty. 13 CFR § 120.110(n) 13. Businesses in which an SBA Lender or any of its Associates owns an equity interest, directly or indirectly, are not eligible. The only exception is when the Associate of the Applicant is a Small Business Investment Company (SBIC), in which case the requirements of 13 CFR § 120.104 apply. 13 CFR § 120.110(o) 14. Businesses that present live performances of a prurient sexual nature or that derive more than de minimis gross revenue, directly or indirectly, through the sale of products, services or the presentation of any depictions or displays of a prurient sexual nature. 13 CFR § 120.110 (p) SBA has determined that financing lawful activities of a prurient sexual nature is not in the public interest. The SBA Lender must consider whether the nature and extent of the sexual component causes the business activity to be prurient. A business is not eligible for SBA assistance if: i. It presents live or recorded performances of a prurient sexual nature; or
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ii. It derives more than 5% of its gross revenue, directly or indirectly, through the sale of products, services or the presentation of any depictions or displays of a prurient sexual nature.
Operationalizing SBA SOP 50 10 8, A.Ch1.E.4 — Life insurance carriers are not eligible. 13 CFR § 120.110(d)
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