Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Oct 18, 2012

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Depending on the nature of the crime or crimes committed, a criminal record can indeed prevent an applicant from being approved for an SBA business loan.

The SBA, more formally known as the Small Business Administration, guarantees financing for businesses. Unlike regular business loans, an SBA one is backed by a federal guarantee that minimizes the potential loss a lender might face. As a result, borrowers often receive better interest rates and options.

The SBA maintains that it will not offer commercial loan guarantees to individuals or businesses that have criminal records of crimes of “moral turpitude.” This term generally refers to felony crimes of a violent or dishonest nature. Examples of such crimes would include embezzlement, aggravated assault, attempted murder, and perjury.

Prospective borrowers who have a criminal record but have not committed crimes that include “moral turpitude” may still be viable business loan applicants. Applicants with criminal records can always speak with an SBA representative in order to see if their specific crimes would result in an instant rejection.

An SBA commercial loan isn’t the only business financing option available for prospective borrowers that have criminal records. Banks, credit unions, and other lenders still offer regular business loans. Speaking to the loan officers at these lenders is the quickest way to find out if one should even bother applying since each lender has their own specific requirements.

Applicants who skip that research step should not be surprised if they are preemptively asked if they have a criminal record. There are a variety of requirements for obtaining a business loan and lenders commonly ask applicants about their personal history—including criminal records.

Even if lenders reject a borrower at one location there are always more lenders to apply to and seek both online and offline. The only thing borrowers with criminal records have to fear is a simple “no.”