For SBA lenders
Short answer
A lender is generally not required to conduct criminal background checks for non-owner managers or key employees unless they are providing a personal guaranty or hold significant influence/control over the business's operations and finances, acting as a principal.
SBA policy primarily focuses on criminal history for owners, partners, officers, directors, and those providing a personal guaranty (collectively, 'principals'). Non-owner managers or key employees are generally not subject to the same criminal background check requirements unless their role is such that they are considered 'principals' in the context of SBA Form 1919 (Borrower Information Form) due to their substantial control or influence. The 'Criminal Justice Reviews for SBA Business Loan Programs - Final Rule' clarified these review parameters.
For a 7(a) loan, a lender reviews an application where the CEO is an owner but the COO is a non-owner employee. The COO holds 5% equity and provides a personal guaranty. In this case, the lender would require a criminal background check for both the CEO and COO because the COO is a guarantor and effectively a principal.
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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