For SBA lenders
Short answer
A material misrepresentation occurs when a borrower knowingly provides false or misleading information on their application or during the loan process, and this information was significant enough to influence the SBA's or lender's decision to approve the loan.
The SBA guaranty is based on the accuracy of information provided by the borrower and verified by the lender. If a borrower makes a material misrepresentation (e.g., about eligibility, criminal history, or financial condition) that is later discovered, the SBA can deny the guaranty purchase entirely, even if the lender acted in good faith.
A borrower fails to disclose a recent, unpaid federal tax lien on SBA Form 1919. If the loan defaults and this misrepresentation is discovered during the guaranty purchase review, the SBA could deny the entire guaranty, deeming the borrower ineligible from the outset.
SOP 50 10 - Lender and Development Company Loan Programs
SOP 50 57 - 7(a) Loan Servicing and Liquidation
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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