For SBA lenders
Short answer
It depends. A business with outstanding federal tax liens or other delinquencies is generally ineligible unless the lien is resolved, or a payment plan is in place and approved by the IRS or other federal agency.
The SBA requires that borrowers not be delinquent on any federal debt. If a federal tax lien exists, the lender must verify it is resolved, paid in full, or the borrower has an approved payment plan with the IRS that is current. The SBA will not approve a loan to a borrower with an outstanding federal tax lien unless an acceptable repayment plan is in place.
A borrower applies for a $500,000 SBA loan but has an outstanding IRS tax lien of $25,000. The lender must ensure the borrower either pays off the lien at or before closing using non-loan funds or provides an approved IRS payment plan that is current and will remain current.
Insider move
Lenders must diligently check for all federal delinquencies, including tax liens, before and during underwriting. Failure to identify and resolve these can lead to an SBA repair or denial of the guaranty. Verification of payment plans and their current status is critical.
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
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 determinations
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