When determining the eligibility of an SBA-guaranteed loan through the 7(a) program, PLP Lenders should keep in mind that businesses owned (defined as a 51% interest) by Lawful Permanent Residents ("LPRs") are eligible.  The SOP 50 10 5(B) defines LPRs as "persons who may live and work in the U.S. for life..."  See SOP 50 10 5(B), page 113.    Lenders should also be aware of the procedures involved in verifying an LPR's status. 

The United States Citizenship and Immigration Sevcies ("USCIS") Form I-551, commonly known as a "green card", is an acceptable form of evidence of LPR status.  If the applicant has submitted the Form I-551 to the USCIS for replacement, or the applicant's I-551 has expired, acceptable forms of evidence of LPR status include: 1) a temporary stamp by USCIS on the applicant's passport that states "Processed for I-551 - Temporary Evidence of Lawful Permanent Residence," 2) a USCIS Form I-327 "Re-entry Permit",  or 3) a USCIS Form I-797 or "Notice of Action" issued when the Form I-551 has been lost or surrendered to the USCIS for renewal or changes.  In order to verify an applicants' LPR status and supporting documentation, PLP Lenders must also submit a USCIS Form G-845 "Document Verification Request" (the "845") to the nearest USCIS office, with a note that the request relates to an SBA-guaranteed loan.  The USCIS requires actual signatures on the 845, so these forms should not be faxed.  PLP Lenders should ensure that the applicant's I-551 or substitute is current before requesting a loan number.

Lenders should be very careful if the applicant business is owned by a "conditional permanent resident."  In the past, SBA has distinguished conditional permanent residents, who are issued a Form I-551 "green card," from LPRs.  Lenders may find this confusing, as Title 8 of CFR § 216.1, which pertains to Aliens and Nationality, defines "conditional permanent resident" as "an alien who has been lawfully admitted for permanent residence."  However, SBA has taken the position that conditional permanent residents, while valid holders of a Form I-551 "green card", do not qualify as LPRs due to their "conditional" status and therefore businesses owned by conditional permanent residents are not eligible for SBA-guaranteed loans unless additional procedures are followed.  If a business is 51% owned by conditional permanent residents, cautious PLP lenders should either submit the loan through general processing or follow the procedures required to extend loans to businesses owned by non-U.S. citizens other than LPRs.

If a business applying for SBA-guaranteed financing is owned by non-U.S. citizens other than LPRs, the loan application must contain assurance that the management of the business is expected to continue in place indefinitely and have U.S. citizenship or verified LPR status.  In such cases, the management of the business must have been in place for at least 1 year prior to the date of the application.  In addition, management of the business must provide personal guarantees as a loan condition.  If no personal guarantees have been required, this decision must be explained in the loan file.  Finally, for businesses owned by non-U.S. citizens other than LPRs, the applicant must pledge collateral located within the jurisdiction of the United States sufficient to pay the loan in full.

                By closely adhering to the SBA's guidelines on lending to businesses owned by non-U.S. citizens, lenders can avoid pitfalls that will lead to repairs or denials of the SBA Guaranty.  

For more information on other SBA eligibility issues, contact the author atcevans@starfieldsmith.com or 215-542-7070.