Glossary · Reading the business
Undischarged Bankruptcy
In short
A bankruptcy case still open and not yet finalized by the court. For buyers, an undischarged bankruptcy for the seller or key principals is a significant red flag that can prevent SBA loan approval.
What it means in a deal
If a seller or any key principal has an undischarged bankruptcy, it generally makes the business ineligible for an SBA 7(a) loan. This signals high financial risk to lenders. You need to verify the bankruptcy status of all key individuals involved in the seller's business during due diligence.
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 Undischarged Bankruptcy
- What if I have declared personal bankruptcy in the past?
- 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?
- How does having a past personal bankruptcy that has been discharged affect my eligibility?
- 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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