Where an Eligible Passive Company borrows to acquire, lease or improve property it leases to one or more Operating Companies (or to fund a change of ownership between existing EPC owners of property held at least 36 months), the SBA Lender ensures every condition of 13 CFR 120.111 is met, since each is read strictly and a breach can lead to denial of the 7(a) guaranty or a 504 CDC recovery claim: the OCs are eligible and small, the use of proceeds is eligible as if the OC borrowed, only one EPC per transaction, the EPC does nothing but lease the property directly to the OCs under a fully executed written lease subordinated to SBA's lien, with a term (with OC-only renewal options) at least equal to the loan term, the rents assigned as collateral, rent no higher than the loan payments plus the EPC's direct holding costs, the OCs leasing 100% of the property, existing mineral lease interests assigned to the OC and subordinated (or a legal opinion and title endorsement), the OC a guarantor or (if it receives proceeds or assets) a Co-Borrower, and each 20%-or-more owner of EPC or OC a guarantor (spouses combined, non-owner spouses signing collateral documents). The Lender tests repayment from the OC's cash flow, collects financial statements from EPC and each OC, and counts the loan against both entities' limits.
The graph holds this control, the 0 it maps to, and the evidence behind each claim, over MCP and REST.