For SBA lenders
Short answer
It depends. A discharged felony conviction does not automatically disqualify an applicant, but the lender must review the nature of the crime and its recency.
SBA rules focus on current legal status, such as being on probation or parole, or having a felony conviction within certain timeframes for crimes involving fraud or moral turpitude. Lenders must conduct a criminal background check and evaluate if the nature of the crime poses an unacceptable risk or violates specific SBA eligibility criteria, even if discharged.
A lender reviews an application where a 30% owner had a felony conviction for assault 8 years ago, fully discharged 5 years ago. The lender assesses if this history impacts the business's ability to repay or the individual's character and capacity, noting it's outside the typical exclusionary periods for certain crimes.
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.
More on eligibility determinations
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day