{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-if-an-applicant-business-owner-has-a-recent-felony-conviction-that-has-been-discharge","api_url":"https://dealroom.so/api/public/questions/what-if-an-applicant-business-owner-has-a-recent-felony-conviction-that-has-been-discharge","question":"What if an applicant business owner has a recent felony conviction that has been discharged?","topic":"Eligibility determinations","audience":"lender","bot_mode":"lender","short_answer":"It depends. A discharged felony conviction does not automatically disqualify an applicant, but the lender must review the nature of the crime and its recency.","rule":"SBA rules focus on current legal status, such as being on probation or parole, or having a felony conviction within certain timeframes for crimes involving fraud or moral turpitude. Lenders must conduct a criminal background check and evaluate if the nature of the crime poses an unacceptable risk or violates specific SBA eligibility criteria, even if discharged.","example":"A lender reviews an application where a 30% owner had a felony conviction for assault 8 years ago, fully discharged 5 years ago. The lender assesses if this history impacts the business's ability to repay or the individual's character and capacity, noting it's outside the typical exclusionary periods for certain crimes.","what_lenders_check":"Lenders must verify the applicant's criminal history through an authorized background check and ensure it complies with current SBA policies. Documentation of discharge and the nature of the offense are critical for the eligibility determination and character assessment.","required_facts":["Felony conviction","Discharged","Recency of conviction","Nature of crime","SBA character requirements"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","Criminal Justice Reviews for SBA Business Loan Programs - Final Rule","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":"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":"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":"Discharged felony conviction","url":"https://dealroom.so/glossary/discharged-felony-conviction"},{"term":"Felony Conviction","url":"https://dealroom.so/glossary/felony-conviction"},{"term":"Applicant","url":"https://dealroom.so/glossary/applicant"},{"term":"Discharged","url":"https://dealroom.so/glossary/discharged"},{"term":"Felony","url":"https://dealroom.so/glossary/felony"},{"term":"Conviction","url":"https://dealroom.so/glossary/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-an-applicant-business-owner-has-a-recent-felony-conviction-that-has-been-discharge","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."]}