{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-if-a-principal-has-a-recent-criminal-history-that-is-not-a-felony","api_url":"https://dealroom.so/api/public/questions/what-if-a-principal-has-a-recent-criminal-history-that-is-not-a-felony","question":"What if a principal has a recent criminal history that is not a felony?","topic":"Eligibility determinations","audience":"lender","bot_mode":"lender","short_answer":"Non-felony criminal history must be disclosed on SBA Form 1919 and may still impact eligibility, depending on the nature of the offense and the recency.","rule":"While certain felony convictions automatically render an applicant ineligible, non-felony offenses, particularly those involving fraud, dishonesty, or breach of trust, must be disclosed. The SBA reviews these on a case-by-case basis. Recent convictions or those demonstrating a lack of good character may still lead to ineligibility, even if they are misdemeanors.","example":"An applicant discloses a misdemeanor conviction for petty theft from five years ago. The lender would review the specifics, determine if it involves fraud or dishonesty, and assess its recency. If it's an isolated incident and the applicant demonstrates rehabilitation, it may not impact eligibility, but it requires full disclosure and review.","what_lenders_check":"Lenders must ensure complete and accurate disclosure of all criminal history on SBA Form 1919. Any non-felony conviction, especially those related to financial integrity, requires careful evaluation and proper documentation to ensure the applicant meets SBA's good character requirements.","required_facts":["Criminal history","Non-felony offense","Disclosure","Good character","SBA Form 1919"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","SBA Form 1919 - Borrower Information Form","Criminal Justice Reviews for SBA Business Loan Programs - Final Rule","13 CFR Part 120 - Business Loans"],"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":"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"},{"title":"Criminal Justice Reviews for SBA Business Loan Programs - Final Rule","url":"https://www.federalregister.gov/documents/2024/04/30/2024-09009/criminal-justice-reviews-for-the-sba-business-loan-programs-disaster-loan-programs-and-surety-bond"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"}],"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":"criminal history","url":"https://dealroom.so/glossary/criminal-history"},{"term":"Criminal History Disclosure","url":"https://dealroom.so/glossary/criminal-history-disclosure"},{"term":"Felony","url":"https://dealroom.so/glossary/felony"},{"term":"Felony Convictions","url":"https://dealroom.so/glossary/felony-convictions"},{"term":"Felony indictment","url":"https://dealroom.so/glossary/felony-indictment"},{"term":"Felony Conviction","url":"https://dealroom.so/glossary/felony-conviction"}],"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-principal-has-a-recent-criminal-history-that-is-not-a-felony","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."]}