Can you get an SBA loan if you owe back taxes?
Short answer
It is a problem. Applicants certify they are current on federal, state and local taxes. A business that has not filed required federal returns is ineligible. Whether an IRS payment plan satisfies this is not stated. Source: SOP 50 10 8.1, Sec. A, Ch. 5, Para. B.
Unpaid taxes can stop a loan even though they are not a Prior Loss. Several SBA requirements apply.
Filing
If an applicant has not filed required federal tax returns, it is not eligible. See SOP 50 10 8.1, Sec. A, Ch. 5, Para. B, p. 95.
Being current
On Form 1919, the applicant certifies it is current on all federal, state and local taxes. That includes income, payroll, real estate and sales taxes. Sec. B, Ch. 6, Para. D.8 requires the same certification before disbursement.
What the loan cannot pay
Proceeds cannot pay past-due payroll, sales or similar taxes held in trust for a government (13 CFR § 120.130(e)). Delinquent business income taxes may be paid only with an approved IRS payment arrangement on which you are current. See Sec. A, Ch. 3, Para. B.
Not a Prior Loss
The SOP says loss does not include unpaid or delinquent taxes. The Delinquent Federal Debt rule covers nontax debt only.
What is not stated
SBA's text does not say whether an applicant on an IRS installment plan meets the Form 1919 certification. Ask your lender before you apply. The lender must generally obtain IRS tax transcripts and reconcile them against your financial data. On SBA Express and Export Express loans, the lender may skip reconciliation only if it does not use business financial information (Sec. A, Ch. 5, Para. B.4.g).
Ask lending partners about your loan
Tell us the amount you need and what it is for. We refer you to lenders that may fund businesses like yours, and it costs you nothing.
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