SBA loan basics
Short answer
Yes, all owners of 20% or more of the business must undergo specific character and background checks as part of the SBA 7(a) loan application process.
The SBA requires applicants and principals to disclose information about their criminal history, outstanding legal judgments, and certain tax delinquencies on SBA Form 1919. Lenders will conduct background checks, including a review of criminal records, to verify this information. Certain serious offenses or unaddressed financial issues can lead to ineligibility.
During the application, an owner discloses a minor felony from 15 years ago that resulted in no jail time. The lender conducts a background check to verify this information and submits it to the SBA for character review if required, which could still be approved due to the age and nature of the offense.
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
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.
More on character requirements
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