SBA rules · SOP 50 10 8.1
Can an SBA loan finance a business with gambling revenue?
Yes, an SBA loan can finance a business that generates revenue from gambling, but only if gambling is not the purpose of the business and legal gambling revenue accounts for one-third or less of its annual gross revenue.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- Revenue threshold: An applicant is ineligible if it derived more than one-third of its annual gross revenue for the prior year, including rental income, from legal gambling activities.
- Eligible gambling activities: A business earning one-third or less of its annual gross revenue from gambling may qualify if the revenue comes from commissions on official State lottery ticket sales under a State license, or from gambling activities licensed and supervised by a state authority where legal.
- Ineligible purpose: If the purpose of the business is gambling (such as a gambling casino, a pari-mutuel betting racetrack, or skill games like video poker), the business is ineligible regardless of the percentage of gross revenue derived from gambling.
The source
What the SOP says
“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, a gambling casino, or skill games (e.g. video poker) 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: Commissions from official State lottery ticket sales under a State license; or Gambling activities licensed and supervised by a state authority in those states where the activities are legal.
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This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.