While the vast majority of small businesses are eligible for loans through the U.S. Small Business Administration (“SBA”) 7a guaranteed loan program, a business may be ineligible because its activities or purpose is illegal, unconstitutional, or violates public policy. Under the SBA’s regulations and Standard Operating Procedures (“SOP”), a lender must determine if the business of an SBA loan applicant (“Applicant”) falls within one of the SOP’s ineligible business categories. A type of ineligible business is one that is “…principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting” (13 C.F.R. 120.110 (k)). This eligibility rule is consistent with the First Amendment of the United States Constitution, which prohibits the government from establishing, promoting, or favoring one religion over another, or non-religion over religion. The SOP states that a business is not ineligible “merely because it offers religious books, music, ceremonial items and other religious articles for sale.” Thus, a bookstore that sells copies of the Quran among a variety of other titles, or a jewelry business that offers rosaries along with engagement rings, is not necessarily ineligible because a religious product represents a small portion of its overall business. The … Continue reading Best Practices: Evaluating the Eligibility of Religious Small Business Applicants