Glossary · People and paperwork
Misrepresentation
In short
A false statement of fact made by one party to another, which induces the other party to enter into a contract. This can be intentional or unintentional.
What it means in a deal
If the seller provides inaccurate financial data or business claims, it's a misrepresentation. Lenders and the SBA will scrutinize all information. Discovering misrepresentation during due diligence can invalidate your offer or affect your loan approval; post-closing, it can lead to legal action.
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 Misrepresentation
- What constitutes a "material misrepresentation" by a borrower that could lead to a 7(a) guaranty denial?
- What constitutes a "material misrepresentation" by a borrower that could lead to an outright 7(a) guaranty denial?
- What are the consequences if SBA Form 1919 contains material omissions or misrepresentations?
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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