[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR123.404]

[Page 356-357]
 
                TITLE 13--BUSINESS CREDIT AND ASSISTANCE
 
                CHAPTER I--SMALL BUSINESS ADMINISTRATION
 
PART 123_DISASTER LOAN PROGRAM--Table of Contents
 
                 Subpart E_Pre-Disaster Mitigation Loans
 
Sec.  123.404  When is your business ineligible to apply for a pre-disaster 

mitigation loan?

    Your business is ineligible to apply for a pre-disaster mitigation 
loan if your business (including its affiliates) satisfies any of the 
following conditions:
    (a) Any of your business' principal owners is presently 
incarcerated, or on probation or parole following conviction of a 
serious criminal offense, or has been indicted for a felony or a crime 
of moral turpitude;
    (b) Your business' only interest in the business property is in the 
form of a security interest, mortgage, or deed of trust;
    (c) The building, which is the subject of the mitigation measure, 
was newly constructed or substantially improved on or after February 9, 
1989, and (without significant business justification) is located 
seaward of mean high tide or entirely in or over water;
    (d) Your business is an agricultural enterprise. Agricultural 
enterprise means a business primarily engaged (see Sec.  121.107 of this 
chapter) in the production of food and fiber, ranching and raising of 
livestock, aquaculture and all other farming and agriculture-related 
industries. Sometimes a business is engaged in both agricultural and 
non-agricultural business activities. If the primary business activity 
of your business is not an agricultural enterprise, it may apply for a 
pre-disaster mitigation loan, but loan proceeds may not be used, 
directly or indirectly, for the benefit of the agricultural activities;
    (e) Your business is engaged in any illegal activity;
    (f) Your business is a government owned entity (except for a 
business owned or controlled by a Native American tribe);
    (g) Your business presents live performances of a prurient sexual 
nature or derives directly or indirectly more than de minimis gross 
revenue through the sale of products or services, or the

[[Page 357]]

presentation of any depictions or displays, of a prurient sexual nature;
    (h) Your business engages in lending, multi-level sales 
distribution, speculation, or investment (except for real estate 
investment with property held for commercial rental);
    (i) Your business is a non-profit or charitable concern;
    (j) Your business is a consumer or marketing cooperative;
    (k) Your business derives more than one-third of its gross annual 
revenue from legal gambling activities;
    (l) Your business is a loan packager that earns more than one-third 
of its gross annual revenue from packaging SBA loans;
    (m) Your business principally engages in teaching, instructing, 
counseling, or indoctrinating religion or religious beliefs, whether in 
a religious or secular setting; or
    (n) Your business is primarily engaged in political or lobbying 
activities.