Glossary · People and paperwork
Chapter 13 Bankruptcy
In short
A type of bankruptcy allowing individuals with regular income to repay debts over three to five years. This is a red flag for SBA lenders, as it indicates past financial distress.
What it means in a deal
The SBA will not approve a loan if an applicant, or any Principal, is currently in a Chapter 13 Bankruptcy. It must be Discharged and demonstrate a period of re-established creditworthiness. Lenders need assurance of your ability to manage debt responsibly.
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 Chapter 13 Bankruptcy
- Will a past bankruptcy (e.g., Chapter 7 discharged 5 years ago) automatically disqualify me from an SBA 7(a) loan?
- How does the SBA define an "associate" for affiliation purposes under 13 CFR 121?
- How does SBA define an 'associate' for affiliation purposes under 13 CFR 121, impacting size determination?
- How does the SBA define an 'associate' for affiliation purposes under 13 CFR 121, beyond direct ownership?
- What if I have declared personal bankruptcy in the past?
- How does a prior personal bankruptcy impact SBA 7(a) loan eligibility?
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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