When applying for an SBA loan, the Small Business Administration (SBA) looks at a borrower’s criminal background on a case-by-case basis. This means that individuals with felonies – or other crimes involving moral turpitude – may still be eligible for an SBA loan. However, certain factors will be taken into consideration before approval is granted.
Can You Get an SBA Loan With a Felony?
Yes, you can get an SBA loan with a felony in some cases. However, if your felony is “moral turpitude,” such as burglary, kidnapping, robbery, or fraud, in most cases, you will be rejected. Sometimes, in the case-by-case, lenders will analyze how long ago you committed your offense and maybe approve an SBA loan.
To start, the type of felony committed is essential and will affect the outcome of an application for business financing. For example, violent crimes such as murder or assault might automatically disqualify someone from receiving an SBA loan. But if the crime was financial – say embezzlement or fraud – approval may still be granted depending on the individual circumstances of the applicant and how long ago they committed their offense.
“Moral turpitude” Felony List
- Grand theft: the act of unlawfully taking property from another person to permanently deprive that individual of their property.
- Arson: intentionally setting fire to, or causing damage to, a building or other structure.
- Burglary: illegally entering a dwelling or place intending to commit a crime.
- Fraud: deceiving another person to obtain something of value by making false representations, omitting material information, or using deception.
- Kidnapping: seizing, confining, abducting, or carrying away an individual without lawful authority and against their will.
- Manslaughter: killing someone without prior intent or malice but under circumstances where the act could reasonably be seen as an accident or mistake.
- Robbery: using force or threats of violence to steal something from another individual.
- Trafficking in illegal drugs: manufacturing, possessing, selling, and distributing an illegal drug in any jurisdiction.
The other factor that must be considered when applying for an SBA loan with a felony is how much time has passed since the applicant’s conviction. A recent conviction could sway approval away from the applicant. At the same time, older beliefs are more likely to be forgiven if they do not relate directly to running a business or if no new offenses have been committed in the interim period.
In some cases, applicants can also apply for an expungement of their record which would help boost their chances of getting approved for financing by demonstrating their effort to make changes and move forward positively since their conviction.
Ultimately, each application is assessed on its own merits, considering all these factors to determine whether someone with a felony should receive funding from the SBA. Suppose you have any questions about your situation specifically. In that case, it is best to speak to someone at your local SBA office so you can get accurate information about your eligibility before submitting your application.
After leaving Wells Fargo Bank in 2014, Daniel began a career as a finance consultant, advising companies and individuals on economic policy, labor relations, and financial management.
At Promtfinance.com, Daniel writes about personal finance topics, value estimation, budgeting strategies, retirement planning, and portfolio diversification.
Read more on Daniel Smith's biography page.
Contact Daniel: daniel@promtfinance.com