Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

Which type of business is ineligible for SBA 7(a) loan assistance primarily due to its focus on financial lending activities?

1. Real estate brokerage

2. Life insurance companies

3. Business consulting

4. Marketing agencies

The correct answer is: Life insurance companies

The type of business that is ineligible for SBA 7(a) loan assistance, primarily due to its focus on financial lending activities, is life insurance companies. The rationale behind this exclusion involves the nature of the business itself. Life insurance companies primarily engage in activities related to underwriting and selling life insurance policies, which is a financial service rather than a traditional business operating in commerce or industry. The SBA aims to provide loans to businesses that will use the funds for growth, operational expenses, and other objectives that stimulate economic activity, rather than contributing to the financial sector's stability or profitability directly through lending activities. In contrast, real estate brokerage, business consulting, and marketing agencies operate in sectors that are not focused solely on financial services. These types of businesses typically utilize SBA loans for purposes such as expansion, marketing efforts, or other operational needs, which align with the goals of the SBA in promoting the growth of small businesses in varied industries.