For SBA lenders
Short answer
Lenders must document and assess non-felony criminal history to determine if it impacts the principal's 'good character' and the business's eligibility, often requiring a detailed explanation from the applicant.
While a felony conviction or current probation/parole status for a felony typically renders an applicant ineligible, non-felony offenses may still raise character concerns. Lenders must exercise prudent lending judgment, evaluating the nature, severity, and recency of the offense, and how it relates to business integrity. The SBA Form 1919 asks for specific criminal history disclosures.
An applicant discloses a misdemeanor conviction for petty theft from two years ago. The lender would require a written explanation from the applicant, including details of the event and any rehabilitation efforts. The lender would then assess if this history undermines the applicant's ability to operate a business prudently.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
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.
More on eligibility & character
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