Glossary · People and paperwork
Breach of Trust
In short
A violation of a fiduciary duty or misuse of entrusted funds or property. The SBA considers convictions for such crimes as a serious character issue for loan applicants.
What it means in a deal
The SBA scrutinizes any applicant's history for crimes involving "breach of trust," such as embezzlement or fraud. If you or any key principal has been convicted, is on parole, or probation for such a crime, it will likely render you ineligible for an SBA loan. Full disclosure on SBA Form 1919 is mandatory, as any nondisclosure can lead to a guaranty denial.
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 Breach of Trust
- For a business owned by a trust, what citizenship and residency requirements apply to the trustee for 7(a) eligibility?
- Can a business owned by a trust be eligible for a 7(a) loan if the trustee is a foreign national?
- How does the SBA determine affiliation between businesses controlled by a common trust?
- When does common ownership through a trust or estate create affiliation for size purposes?
- Can I use inherited money that is currently in a trust to fund my equity injection?
- Can a trust or an estate be an eligible borrower for an SBA 7(a) loan?
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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