Glossary · People and paperwork
Borrower fraud
In short
Intentional deception by the borrower to obtain an SBA loan or avoid repayment. This is a federal crime with severe penalties and causes the SBA to deny its guaranty.
What it means in a deal
Any deliberate act to falsify information, hide material facts, or misuse loan funds constitutes borrower fraud. This will lead to the lender calling the loan, the SBA denying its guaranty, and potential criminal prosecution. Ensure all financial statements and representations are truthful and complete.
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 Borrower 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?
- What documentation is needed to verify a borrower's equity injection when it comes from an existing business owned by the borrower?
- What does 'SBA guarantee' actually mean for me, the borrower?
- What does the 'SBA guarantee' actually mean for me, the borrower?
- How does the SBA guarantee truly benefit me as the borrower?
- Does the SBA guaranty protect me, the borrower, if my business fails?
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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