{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-if-a-business-applicant-has-outstanding-federal-tax-liens-or-delinquencies","api_url":"https://dealroom.so/api/public/questions/what-if-a-business-applicant-has-outstanding-federal-tax-liens-or-delinquencies","question":"What if a business applicant has outstanding federal tax liens or delinquencies?","topic":"Eligibility determinations","audience":"lender","bot_mode":"lender","short_answer":"It depends. A business with outstanding federal tax liens or other delinquencies is generally ineligible unless the lien is resolved, or a payment plan is in place and approved by the IRS or other federal agency.","rule":"The SBA requires that borrowers not be delinquent on any federal debt. If a federal tax lien exists, the lender must verify it is resolved, paid in full, or the borrower has an approved payment plan with the IRS that is current. The SBA will not approve a loan to a borrower with an outstanding federal tax lien unless an acceptable repayment plan is in place.","example":"A borrower applies for a $500,000 SBA loan but has an outstanding IRS tax lien of $25,000. The lender must ensure the borrower either pays off the lien at or before closing using non-loan funds or provides an approved IRS payment plan that is current and will remain current.","what_lenders_check":"Lenders must diligently check for all federal delinquencies, including tax liens, before and during underwriting. Failure to identify and resolve these can lead to an SBA repair or denial of the guaranty. Verification of payment plans and their current status is critical.","required_facts":["Federal tax lien","IRS payment plan","Delinquent federal debt","Lien resolution"],"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":"Can a trust or an estate be an eligible borrower for an SBA 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-trust-or-an-estate-be-an-eligible-borrower-for-an-sba-7-a-loan"},{"question":"What constitutes \"passive income\" disqualifying a business from 7(a) loan eligibility?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-passive-income-disqualifying-a-business-from-7-a-loan-eligibility"},{"question":"Are businesses that primarily derive revenue from real estate rentals eligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/are-businesses-that-primarily-derive-revenue-from-real-estate-rentals-eligible-for-a-7-a-l"},{"question":"Can a business primarily engaged in lending or investment be eligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-business-primarily-engaged-in-lending-or-investment-be-eligible-for-a-7-a-loan"},{"question":"What impact does a principal's recent federal tax lien have on 7(a) loan eligibility, even if paid?","url":"https://dealroom.so/for-lenders/questions/what-impact-does-a-principal-s-recent-federal-tax-lien-have-on-7-a-loan-eligibility-even-i"},{"question":"How does the SBA define 'passive business' making it ineligible for a 7(a) loan, and what specific activities might trigger this?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-define-passive-business-making-it-ineligible-for-a-7-a-loan-and-what-spec"}],"related_terms":[{"term":"Tax Delinquencies","url":"https://dealroom.so/glossary/tax-delinquencies"},{"term":"Unpaid Tax Liens","url":"https://dealroom.so/glossary/unpaid-tax-liens"},{"term":"Outstanding federal taxes","url":"https://dealroom.so/glossary/outstanding-federal-taxes"},{"term":"Applicant","url":"https://dealroom.so/glossary/applicant"},{"term":"Outstanding tax lien","url":"https://dealroom.so/glossary/outstanding-tax-lien"},{"term":"Federal tax liabilities","url":"https://dealroom.so/glossary/federal-tax-liabilities"}],"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/what-if-a-business-applicant-has-outstanding-federal-tax-liens-or-delinquencies","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."]}