For SBA lenders
Short answer
Certain criminal offenses, especially felonies within the last five years, or any offense involving fraud or dishonesty, can render an applicant or principal ineligible for an SBA 7(a) loan.
The SBA requires all loan applicants and principals to disclose their criminal history on SBA Form 1919. A felony conviction, parole, or probation within the last five years, or any crime involving fraud, embezzlement, or dishonesty, can make an applicant ineligible. The SBA reviews these cases on an individual basis, but its primary concern is protecting against potential misuse of federal funds.
An applicant discloses a felony conviction for embezzlement from three years ago. This conviction would likely render the applicant ineligible, regardless of the business's financial strength or collateral.
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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