{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-assess-good-character-for-all-principals-on-a-7-a-loan-application","api_url":"https://dealroom.so/api/public/questions/how-does-a-lender-assess-good-character-for-all-principals-on-a-7-a-loan-application","question":"How does a lender assess 'good character' for all principals on a 7(a) loan application?","topic":"Eligibility & Character","audience":"lender","bot_mode":"lender","short_answer":"Lenders assess 'good character' by reviewing criminal history, financial history, and other relevant background information for all principals. SBA Form 1919 and 912 gather necessary information for this determination.","rule":"SBA requires lenders to determine that principals of the applicant business possess 'good character.' This involves reviewing felony convictions, recent parole/probation status, prior defaults on federal debt, and other factors that may indicate a lack of business integrity or trustworthiness. The SBA Form 1919 requires certifications regarding criminal background.","example":"A lender reviews the SBA Form 1919 for a loan applicant. If a principal discloses a misdemeanor conviction from five years ago, the lender must assess if it impacts their character relative to the business and loan, considering the nature and recency of the offense.","what_lenders_check":"Lenders are concerned with identifying any red flags that might make a borrower ineligible or increase risk. Thorough background checks and accurate completion of SBA forms are crucial to avoid potential guaranty repair or denial based on character issues.","required_facts":["Principal's criminal history","Federal debt defaults","SBA Form 1919 disclosures","Time since offense"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","SBA Form 1919 - Borrower Information Form"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"},{"title":"SBA Form 1919 - Borrower Information Form","url":"https://www.sba.gov/sites/default/files/2025-03/2025.02.27%20Form%201919%20-%20Updates%20%28FINAL%29_03-12-2025%20%281%29.pdf"}],"related_questions":[{"question":"Does having a past criminal record automatically disqualify me for an SBA 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/does-having-a-past-criminal-record-automatically-disqualify-me-for-an-sba-7-a-loan"},{"question":"What is the specific process for verifying foreign citizenship and residency for an SBA 7(a) loan applicant?","url":"https://dealroom.so/for-lenders/questions/what-is-the-specific-process-for-verifying-foreign-citizenship-and-residency-for-an-sba-7-"},{"question":"How do lenders handle a 7(a) loan application if a principal has a recent criminal history that is not a felony?","url":"https://dealroom.so/for-lenders/questions/how-do-lenders-handle-a-7-a-loan-application-if-a-principal-has-a-recent-criminal-history-"}],"related_terms":[{"term":"Good character","url":"https://dealroom.so/glossary/good-character"},{"term":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"},{"term":"Lender's Application for Guaranty","url":"https://dealroom.so/glossary/lender-s-application-for-guaranty"},{"term":"Standard 7(a) loan","url":"https://dealroom.so/glossary/standard-7-a-loan"},{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"7(a) Small Loan","url":"https://dealroom.so/glossary/7-a-small-loan"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-assess-good-character-for-all-principals-on-a-7-a-loan-application","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}