Glossary · People and paperwork
Deferred Prosecution
In short
A deferred prosecution agreement means someone involved in the loan application admitted to a crime but avoids conviction by meeting conditions. The SBA views this seriously, potentially impacting loan eligibility if a key principal is involved.
What it means in a deal
The SBA's Form 1919 asks about criminal history, including deferred prosecutions. If a key principal has one, it triggers a character review by the SBA. You'll need to provide full details and potentially wait for SBA approval, which can delay or even derail the loan.
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 Deferred Prosecution
- What if the business I'm buying has existing deferred revenue or unearned income?
- Can a partial equity injection come from a deferred management bonus from my current employer?
- How does a lender underwrite a business acquisition with existing deferred revenue or unearned income?
- How does a lender assess deferred maintenance or capital expenditure needs of an acquired business?
- Can a seller note with deferred payments but no interest count as full standby for equity injection?
- What specific conditions allow a seller note with deferred principal payments but immediate interest to qualify as full standby?
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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