SBA rules · SOP 50 10 8.1

Can an SBA loan finance an oil and gas drilling business?

Yes, an SBA 7(a) or 504 loan may finance an oil drilling business if it drills in established fields, but wildcatting in oil is strictly ineligible as a speculative business.

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

In detail

Speculation restriction: Speculative businesses are ineligible for SBA financing, which explicitly includes wildcatting in oil. However, a business engaged in drilling for oil in established fields is defined as non-speculative and may be eligible.
504 equity requirements: Under the 504 loan program, oil wells are classified as Limited or Special Purpose Properties. This designation increases the minimum required borrower contribution to 15%, or 20% if the project also involves a new business.
Environmental review: Oil and gas extraction (NAICS 211) is categorized as an environmentally sensitive industry. Because of this designation, the environmental investigation must begin with a Phase I Environmental Site Assessment regardless of loan amount.

The source

What the SOP says

“A business engaged in drilling for oil in established fields; and

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Non-speculative businesses that may be eligible include: (lines 522-527)✓ Verified

“Wildcatting in oil;

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Speculative businesses include: (lines 516-521)✓ Verified

“If there is a NAICS code match to an environmentally sensitive industry identified in Appendix 6, the Environmental Investigation must begin with a Phase I, regardless of the amount of the loan.

SOP 50 10 8.1, Chapter 5: Other Core Requirements > Environmental Investigation Steps (lines 1500-1508)✓ Verified

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