SBA Loan Closings (Session 3): Eligible Passive Company and Operating Company Loans in SBA 504 and 7(a) Loan Closings

• 1 When an eligible passive company may be the SBA borrower under the EPC/OC exception in 13 CFR
• 2 When an operating company must be a co‑borrower rather than a guarantor (owns project assets, gets working capital, or OC expenses in a debt refi)
• 3 Permitted EPC uses of loan proceeds and change‑of‑ownership limits, including 36 months ownership, full divestiture, and up to 12‑month transition
• 4 Lease and title requirements: 100% of project property must be leased, lease subordinated to SBA lien, nondisturbance not permitted, and watch recording/mineral issues

Based on transcript analysis