For SBA lenders
Short answer
Borrowers are generally ineligible if they are currently incarcerated, on probation, parole, or subject to a pretrial diversion program for a felony or any crime involving fraud, dishonesty, or a lack of business integrity. Recent felony convictions can also lead to ineligibility.
SBA rules prohibit loans to individuals who are currently under indictment, on probation or parole, or who have been convicted of a felony or a crime involving fraud, dishonesty, or business integrity within certain look-back periods. Applicants must certify their criminal history status on SBA Form 1919. The SBA conducts a criminal background check to verify this information.
A potential borrower for a $500,000 7(a) loan discloses a felony conviction for embezzlement that occurred three years ago, for which they completed parole two years ago. This conviction would likely render them ineligible, even though parole is complete.
SOP 50 10 - Lender and Development Company Loan Programs
SBA Form 1919 - Borrower Information Form
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.
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