Can someone on probation or parole get an SBA loan?
Short answer
Possibly. SOP 50 10 8.1, Sec. A, Ch. 1, Para. E says a business owned by someone on parole or probation may be eligible. If the business depends primarily on that person, the applicant must give the lender a plan for continued operations if the person is reincarcerated.
It is possible. A business owned by someone currently on parole or probation may be eligible. That is SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.
The continuity plan
If the success of the business depends primarily on that person, the applicant must give the lender a plan. The plan covers how the business would keep operating if the person is reincarcerated.
Extra guaranty
The lender should consider whether it would be prudent to require another person to provide a full or limited guaranty. The SOP frames this as protecting SBA's and the lender's interests.
The status test still applies
Parole or probation is treated differently from being incarcerated, serving a sentence of imprisonment or being under indictment. Those three make a business ineligible under 13 CFR § 120.110(n). Form 1919, question 4 uses the regulation's words. Ask your attorney if you are unsure which status you have.
Recent convictions
Form 1919 also asks you to certify about convictions in the last three years for offenses listed in SBA's debarment regulations. If you cannot certify, you need a written statement of exception from SBA.
Lender judgment
SBA's rule makes the loan possible, but it does not require a lender to make it. Lender policies on these files vary.
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