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.
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.
“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.
“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.
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.
More on who and what is eligible
Can an ESOP get an SBA loan?Can an SBA loan finance a bail bonds company?Can an SBA loan finance a business in a foreign country?Can an SBA loan finance a business owned by a Native American tribe?Can an SBA loan finance a business run by a management company?Can an SBA loan finance a business that sells adult products?All SBA rules
Related reading
What Lenders Actually Look for in an SBA Acquisition LoanWhy SBA Loans Get Denied (And How to See It Coming)What Documents Do I Need for an SBA Loan? Complete Guide
This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.