{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/when-is-a-lender-required-to-conduct-a-criminal-background-check-for-non-owner-managers-or","api_url":"https://dealroom.so/api/public/questions/when-is-a-lender-required-to-conduct-a-criminal-background-check-for-non-owner-managers-or","question":"When is a lender required to conduct a criminal background check for non-owner managers or key employees of an applicant business?","topic":"Eligibility determinations","audience":"lender","bot_mode":"lender","short_answer":"A lender is generally not required to conduct criminal background checks for non-owner managers or key employees unless they are providing a personal guaranty or hold significant influence/control over the business's operations and finances, acting as a principal.","rule":"SBA policy primarily focuses on criminal history for owners, partners, officers, directors, and those providing a personal guaranty (collectively, 'principals'). Non-owner managers or key employees are generally not subject to the same criminal background check requirements unless their role is such that they are considered 'principals' in the context of SBA Form 1919 (Borrower Information Form) due to their substantial control or influence. The 'Criminal Justice Reviews for SBA Business Loan Programs - Final Rule' clarified these review parameters.","example":"For a 7(a) loan, a lender reviews an application where the CEO is an owner but the COO is a non-owner employee. The COO holds 5% equity and provides a personal guaranty. In this case, the lender would require a criminal background check for both the CEO and COO because the COO is a guarantor and effectively a principal.","what_lenders_check":"Lenders must carefully assess the roles and responsibilities of all individuals associated with the business, beyond just formal ownership, to determine if they qualify as a 'principal' under SBA rules. Misinterpreting this can lead to eligibility issues and potential guaranty repair or denial.","required_facts":["Non-owner managers","Key employees","Criminal background check","Personal guaranty","Principal definition"],"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"],"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"}],"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 Background Check","url":"https://dealroom.so/glossary/criminal-background-check"},{"term":"Background check","url":"https://dealroom.so/glossary/background-check"},{"term":"Personal Background Check","url":"https://dealroom.so/glossary/personal-background-check"},{"term":"Originating lender","url":"https://dealroom.so/glossary/originating-lender"},{"term":"Non-owner guarantor","url":"https://dealroom.so/glossary/non-owner-guarantor"},{"term":"Non-owner spouse","url":"https://dealroom.so/glossary/non-owner-spouse"}],"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/when-is-a-lender-required-to-conduct-a-criminal-background-check-for-non-owner-managers-or","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."]}