Glossary · Reading the business
Discharge
In short
Discharge is the legal release from debt obligations, typically granted in a bankruptcy proceeding. While it clears old debts, a recent discharge from bankruptcy will still be scrutinized by SBA lenders and can affect your loan eligibility.
What it means in a deal
A bankruptcy discharge doesn't erase the fact of the bankruptcy from your credit history, which lenders will see. If the discharge was recent, or if the bankruptcy involved fraud or significant government losses, your SBA loan application will likely be rejected due to character concerns.
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 Discharge
- How does having a past personal bankruptcy that has been discharged affect my eligibility?
- What if an applicant business owner has a recent felony conviction that has been discharged?
- How does a prior personal bankruptcy, now discharged, impact my SBA 7(a) loan application?
- Will a past bankruptcy (e.g., Chapter 7 discharged 5 years ago) automatically disqualify me from an SBA 7(a) loan?
- How does a personal bankruptcy from five years ago, now discharged, impact my eligibility for an SBA 7(a) acquisition 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.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.