Lender Q&A: Does the SBA still place personal liquidity thresholds on loan applicants?
Does the SBA still place personal liquidity thresholds on loan applicants?
Answer by Tom McHale, Senior Vice President
No. Prior to a recent rule change, SBA required all owners of 20% or more of a small business applicant to pass a personal liquidity test. This Personal Resources Test (PRT) placed liquidity maximums on each qualifying owner typically equal to the amount of the total project costs (i.e. building purchase price, renovations, etc.). If a qualifying owner held more liquid assets (i.e. cash, marketable securities, etc.) than allowed, then that owner was required to inject additional funds into the project. The PRT was eliminated in 2014 increasing the pool of small businesses that qualify for SBA's programs.