For SBA lenders
Short answer
Business owners must meet basic character requirements, including a lack of recent felony convictions, no active criminal proceedings, and not being on probation or parole for specific offenses.
SBA's character requirements aim to ensure loans are made to individuals who demonstrate integrity. Applicants are screened for felony convictions within specific look-back periods (e.g., one year for any felony, or longer for certain financial crimes), current criminal proceedings, and probation/parole status. Misrepresentation of criminal history on SBA Form 1919 can also be a character concern.
A lender reviews an application and discovers one of the 50% owners is currently on probation for a felony conviction related to financial fraud. The lender determines the applicant is ineligible due to the current probation status and the nature of the crime.
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
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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