SBA rules · SOP 50 10 8.1

Can I get an SBA loan with a criminal record?

Possibly. A business is ineligible while an owner or other associate is in prison, serving a sentence, or under indictment for a felony or a financial-misconduct crime, and 504 loans have a stricter rule.

Quoted from SBA SOP 50 10 8.1Every quote checked word for word

In detail

Ineligible conditions: A business is ineligible if an Associate is currently incarcerated, serving a sentence of imprisonment upon adjudication of guilty, or under indictment for a felony or any crime involving financial misconduct or a false statement.
Parole or probation: A business owned by an individual on parole or probation may be eligible, but if business success depends primarily on that person, the applicant must provide a plan for continued operations in the event of reincarceration, and the lender should consider requiring an additional guarantor.
504 program restriction: An applicant is ineligible for a 504 loan if any Associate responds "Yes" to the question regarding criminal history on SBA Form 1244.

How sbaloansHQ handles this

How does sbaloansHQ handle a criminal record?

Tell us at the start, privately. A past record does not by itself rule out a 7(a) loan, but lenders differ in how they treat one, so it shapes which lender we choose. A 504 loan is out if any owner answers yes to the criminal history question, so we steer those deals to 7(a).

sbaloansHQ is free to borrowers: the lender pays us a referral fee. There is no exclusivity agreement and no upfront deposit. About us

The source

What the SOP says

“Businesses with an Associate who is currently incarcerated, serving a sentence of imprisonment imposed upon adjudication of guilty, or is under indictment for a felony or any crime involving or relating to financial misconduct or a false statement are ineligible.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Special Requirements Applicable to Native American Businesses: (lines 462-471)✓ Verified

“A business that is owned by an individual(s) who is currently on parole or probation may be eligible, but if the success of the business operations is primarily dependent on such individual, the Applicant must provide to the SBA Lender a plan for the continued operations of the business in the event of reincarceration, and the SBA Lender should consider whether it would be prudent, in order to protect SBA’s and the SBA Lender’s interests, to require an additional individual to provide a full or limited loan guaranty.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Special Requirements Applicable to Native American Businesses: (lines 462-471)✓ Verified

“The Applicant is not eligible for a 504 loan if any Associate (as defined in 13 CFR § 120.10) responds “Yes” to the question regarding criminal history on SBA Form 1244.

SOP 50 10 8.1, Chapter 1: Eligibility through Submission of Application > The CDC completes or obtains the following: (lines 3647-3656)✓ Verified

Have a deal in mind?

Tell us about it and we will tell you how these rules apply, and which lenders finance deals like yours.

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