SBA rules · SOP 50 10 8.1

Can an SBA loan finance a mortgage company?

A mortgage company is eligible if it primarily services loans or disburses and sells them within 14 calendar days, but is ineligible if it holds loans in portfolio; the SOP does not address mortgage brokers.

Quoted from SBA SOP 50 10 8.1Every quote checked word for word

In detail

Portfolio lenders: Mortgage companies that make loans and hold them in their portfolio are ineligible.
Mortgage servicing companies: Mortgage companies primarily engaged in the business of servicing loans are eligible.
Originating and selling: A mortgage servicing company that disburses loans and sells them within 14 calendar days of loan closing is eligible.
General lending prohibition: SBA cannot guarantee a loan that provides funds to businesses primarily engaged in lending, finance companies, or other businesses whose stock in trade is money.
What the SOP does not say: The SOP's rules do not address whether a mortgage broker that facilitates loans without lending, funding, or holding money is eligible.

Reading the rules together

Mortgage brokers: A broker that merely arranges financing on a fee or commission basis without lending or holding funds may not fall under the prohibition against businesses primarily engaged in lending or businesses whose stock in trade is money, similar to how independent agents of life insurance carriers and fee-based financial advisors remain eligible; however, the SOP does not explicitly confirm eligibility for mortgage brokers.

The SOP does not say this in one place. Confirm it with your lender.

The source

What the SOP says

“A mortgage servicing company that disburses loans and sells them within 14 calendar days of loan closing is eligible. Mortgage companies primarily engaged in the business of servicing loans are eligible. Mortgage companies that make loans and hold them in their portfolio are not eligible.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Certain businesses engaged in lending may be eligible under limited circumstances: (lines 400-405)✓ Verified

“SBA cannot guarantee a loan that provides funds to businesses primarily engaged in lending, investment, or to an otherwise eligible business engaged in financing, factoring, or investment not related or essential to the business.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Types of Ineligible Businesses (lines 388-399)✓ Verified

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