Glossary · People and paperwork
Bank Fraud
In short
Intentionally deceiving a bank for financial gain. If you or the seller have a history of bank fraud, it's a major red flag for the SBA and will likely disqualify the loan.
What it means in a deal
The SBA heavily scrutinizes the character of both borrowers and sellers. Any past convictions or even allegations of bank fraud can lead to an immediate denial of your 7(a) loan application, regardless of the business's strength. Ensure full disclosure upfront to avoid wasting time.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Bank Fraud
- What specific documentation is required in the Universal Purchase Package (UPP) to support a request for guaranty purchase when the borrower has defaulted due to fraud?
- Does the SBA 7(a) loan program require me to use a specific bank or can I choose any bank?
- Can cash in the business bank account count as collateral?
- What does 'Preferred Lender Program' (PLP) status mean for a bank?
- Does the SBA approve my loan application, or does the bank?
- If my business defaults, does the SBA pay the bank directly?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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