In order to qualify for an SBA loan (7a, 504C, or disaster loan), you and your business partners must meet certain eligibility requirements. One of the eligibility requirements is that you meet the SBA’s definition of “good character,” which is based on the SBA’s and the lender’s assessment of your behavior, integrity, candor, and any past criminal record. You must provide information relating to your character on SBA form 912, which can be downloaded by clicking here.
If you have a credit score above 680 (check here for free), have been in business for 2+ years, are profitable, and looking to borrow up to $350k, you my qualify for a streamlined SBA loan with SmartBiz. They can prequalify you in minutes and get you funded fast.
More SBA application forms:
- SBA Form 1919 Borrower Information Form
- SBA Form 159 Fee Disclosure Form & Compensation Agreement
- SBA Form 413 Personal Financial Statement
Who Needs to Complete SBA Form 912?
SBA Form 912 is used to determine your trustworthiness and evaluate whether you or your business partners have any criminal history. The information you provide on the form may also be used as the basis for a background check. This form is mandatory for all “principals,” which includes every proprietor, general partner, officer, director, managing LLC member, owner with 20 % or more equity, trustor, any person hired by the applicant to manage day-to-day operations of the business, and any guarantor of the loan.
Read our full step-by-step guide on How To Apply For An SBA Loan
How to Complete SBA Form 912
SBA Form 912 is fairly short and requires basic personal identification information. The most significant portion of the form are these three main questions:
- Are you presently subject to an indictment, criminal information, arraignment, or other means by which criminal charges are brought?
- Have you been arrested for any criminal offense other than a minor motor vehicle violation?
- For any criminal offense other than a minor vehicle violation, have you ever been convicted, plead guilty, plead no lo contendere (no contest), been placed on pretrial diversion, or placed on any form of parole or probation, including probation before judgement?
It is important to note that you must answer these questions truthfully even if your record was sealed, expunged, or is otherwise unavailable. The information you provide may be verified with a background check. As SBA Form 912 clearly indicates, a criminal record will not necessarily disqualify you from getting an SBA loan, but an untruthful answer will cause your loan application to be denied and subject you to other penalties.
If your answer to these three questions is “no,” simply check off the appropriate boxes and make sure to fill out all the required personal identification information.
If, on the other hand, you have to answer “yes” to any of these questions, SBA Form 912 is slightly more complicated. The rest of this article will guide you through what you need to do if you answer “yes” to any of these questions.
“Yes” to SBA Form 912 Question 7
Unfortunately, if you or any other principal answers “yes” to question 7, you are ineligible for an SBA loan. The SBA will not give loans to businesses whose principals are currently indicted, incarcerated, on probation or parole, or a defendant in a criminal proceeding. The reason for this is that there’s a chance that such individuals will go to prison, which would make it exceedingly difficult for them to run the business and pay back the loan. You must wait until you are no longer subject to any criminal proceedings or no longer under parole or probation before you can successfully apply for an SBA loan.
“Yes” to SBA Form 912 Question 8 or 9
An affirmative answer to questions 8 or 9 is a different story. These questions deal with a past criminal record. A “yes” to these questions will definitely slow down your loan application, but you are still eligible. All loan applications are evaluated on a case-by-case basis based on the nature, frequency, timing of the offenses, and disposition of the offenses.
Here are various scenarios:
- One misdemeanor that was not prosecuted. In this case, it is possible for your lender to clear the misdemeanor without consulting the SBA. Your lender may not require fingerprints or a background check.
- 2-3 misdemeanors that took place at least 10 years before your loan application, or 1 misdemeanor that was prosecuted. In this case, your lender is required to gain clearance from the local SBA office. You will be required to pass a background check and provide fingerprints at your local SBA office.
- Any felony. You will be required to pass a background check and provide fingerprints. Your application must be cleared by either the Office of the Inspector General or the Office of Security Operations.
Regardless of the severity of your offense, you must provide a written explanation of every offense on your record as part of SBA Form 912. Each written statement should include “any pertinent information,” including the date of the offense, the specific jurisdiction where the offense to place, the specific charges you faced, whether it was a misdemeanor or felony, a description of the charges, any unpaid fines, the name under which you were charged, and a letter from your parole or probation board (if applicable) detailing that the conditions of your parole or probation have been met. Once you have written your statement, you must sign and date it and attach it to your SBA Form 912 along with the statement from your parole or probation board.
If you have any prosecuted misdemeanors or felonies, you will have to provide fingerprints and consent to a background check. In this case you must submit your form 912 at the local SBA office, where they will take your fingerprints. Be aware that SBA loan applications that require fingerprints can take an additional 6-12 weeks for processing. To find your local district SBA office, check the list here.
Note: If you have a credit score above 680 (check your score for free), have been in business for 2+ years, are profitable, and looking to borrow up to $350k, you my qualify for a streamlined SBA loan with SmartBiz. They can prequalify you in minutes and get you funded fast.
Note: Buying commercial real estate for you business to operate out of? If you’ve been in business for 3+ years, have a credit core of 680+ (check yours for free), and are profitable you may qualify for a 25-year SBA 7(a) loan for commercial real estate. Get prequalified in just a few minutes with SmartBiz.
SBA Form 912 can make or break your SBA loan application, so be sure to answer everything completely and truthfully. If you have to answer yes to question 7, you are currently ineligible for an SBA loan, but you can apply when there are no indictments or criminal proceedings pending against you or when your parole or probation period is over. If you have to answer yes to questions 8 or 9, it is difficult to predict how this will impact your loan application, but it is definitely still worth pursuing an SBA loan.
Need other SBA forms? We’ve got you covered!