SBA loan basics
Short answer
SBA requires business owners and key principals to demonstrate good character. This includes disclosing certain criminal histories or past defaults on government loans, which can affect eligibility.
The SBA assesses the character of all owners of 20% or more and key management. Applicants must disclose information regarding felony convictions or certain types of criminal history within the past year for certain offenses. Defaulting on prior federal debt, like student loans or other SBA loans, can also lead to ineligibility.
An applicant with a recent felony conviction may be ineligible, while a minor misdemeanor from several years ago might not be a disqualifier. If an owner previously defaulted on a federal student loan and has not resolved it, the business would be ineligible for an SBA loan.
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.
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