Glossary · People and paperwork
Chapter 7 bankruptcy
In short
This is a type of bankruptcy where a business or individual's assets are liquidated to pay off debts. For a buyer, recent personal or business bankruptcy can impact loan eligibility.
What it means in a deal
The SBA reviews a buyer's credit history, and recent bankruptcy filings, especially Chapter 7, are a significant red flag. You'll need to demonstrate financial rehabilitation and stability since the discharge. Lenders will scrutinize the cause and your current financial standing.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
SBA Form 1919 — Borrower Information Form
U.S. Small Business Administration · SBA form
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Chapter 7 bankruptcy
- Will a past bankruptcy (e.g., Chapter 7 discharged 5 years ago) automatically disqualify me from an SBA 7(a) loan?
- How does a prior personal bankruptcy impact SBA 7(a) loan eligibility?
- Can a past bankruptcy prevent me from getting an SBA 7(a) loan?
- Does a past bankruptcy prevent me from getting an SBA 7(a) loan?
- What if I have declared personal bankruptcy in the past?
- Can a business with a recent bankruptcy still get 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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