SBA rules · SOP 50 10 8.1

Can I get an SBA loan if I owe delinquent federal debt?

No, an applicant is not eligible for an SBA loan if an owner, principal, or guarantor owes delinquent federal debt, unless the debt is resolved, meets an exception to delinquency, or receives an SBA waiver.

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

In detail

Ineligibility: An applicant is ineligible for a 7(a) or 504 loan if the applicant, any guarantor (except a Supplemental Guarantor), or any Associate owes outstanding nontax federal debt that has not been paid within 90 days of the due date, which lenders must verify through CAIVRS.
Exceptions to delinquency: A debt is not considered delinquent if the debtor has entered into a satisfactory written repayment agreement and is paying as agreed, is current or discharged in bankruptcy, has cured the delinquency or settled for an agreed compromise, or the debt is in an administrative or judicial appeal.
Full satisfaction: If the delinquent federal debt is fully satisfied, the loan application may be processed, including under delegated authority, provided the lender documents how it was satisfied.
SBA waiver: SBA does not routinely grant waivers, but an authorized agency official (the head of the agency, Chief Financial Officer, or Deputy Chief Financial Officer) may grant a waiver in rare circumstances under 31 CFR § 285.13.
Prior loss rule: If a deficiency or compromise resulted in a recognized loss to the federal government, the applicant remains subject to the Prior Loss rule even if the delinquency is resolved.

The source

What the SOP says

“An Applicant is not eligible for a 7(a) or 504 loan if the Applicant or any guarantor (except a Supplemental Guarantor) owes an outstanding nontax debt to the Federal Government, or any agency thereof, that is in delinquent status (hereafter referred to as “Delinquent Federal Debt”).

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Delinquent Federal Debt (lines 496-500)✓ Verified

“A debt is in “delinquent status” when the debt has not been paid within 90 days of the payment due date.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Delinquent Federal Debt (lines 496-500)✓ Verified

“SBA Lenders must check the Credit Alert Verification Reporting System (CAIVRS), to determine if the Applicant is ineligible for a 7(a) or 504 Loan because the Applicant, or any guarantor or Associate of the Applicant, has any Delinquent Federal Debt.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > NOTE (lines 506-511)✓ Verified

“The obligor has entered into a satisfactory written repayment agreement with the creditor agency to pay the debt, in whole or in part, under terms and conditions acceptable to the creditor agency, and the obligor is paying as agreed; or

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > A debt is not considered “delinquent” if: (lines 501-505)✓ Verified

“If a Delinquent Federal Debt is fully satisfied, the application can be processed, including under an SBA Lender’s delegated authority.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > NOTE (lines 506-511)✓ Verified

“If there was a Loss (as defined in Paragraph 15.b. above) associated with any of these debts, the Applicant remains subject to the Prior Loss rule.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > NOTE (lines 506-511)✓ 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.

See if your deal qualifies →Broker or lender? Ask the SOP your own question