For SBA lenders
Short answer
No, a business is generally ineligible for a 7(a) loan if any owner or principal is currently incarcerated, on probation, or on parole for any felony or a crime involving moral turpitude.
SBA eligibility rules specifically exclude businesses with principals who are currently involved in the criminal justice system in certain capacities. This includes being incarcerated, on probation, or on parole for a felony or a crime involving moral turpitude. This is a character-based eligibility criterion designed to protect the integrity of the program. These facts are typically collected on SBA Form 1919 and Form 912.
A borrower applies for a 7(a) loan, disclosing on Form 1919 that they are currently on probation for a felony conviction from two years prior. The lender would determine the business ineligible based on this information and decline the application.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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