On July 12, SBA officially released revised Form 1919, Borrower Information Form, and posted the final fillable form (dated 04/2024) to the Agency’s website. Concurrent with that action, SBA issued Information Notice 5000-857390, SBA Form 1919 Updated for Criminal Justice Reviews Final Rule (effective July 12, 2024), to announce issuance of the new form.
The new 1919 form has been revised to reflect the changes in the Final Rule on Criminal Justice Reviews for the SBA Business Loan Programs, Disaster Loan Programs, and Surety Bond Guaranty Program, 89 FR 34094, (effective May 30, 2024). As a reminder, the Final Rule revised 13 CFR 120.110(n) to state: “Businesses with an Associate who is currently incarcerated, serving a sentence of imprisonment imposed upon adjudication of guilty, or is under indictment for a felony or any crime involving or relating to financial misconduct or a false statement”. The implementing notice defines “serving a sentence of imprisonment imposed upon adjudication of guilty” as meaning a person who is serving a sentence for a crime for which they have been found guilty, including when such individual is under house arrest, on work release, or subject to a similar program. In accordance with the regulatory change, a business with an associate who is on parole or probation is no longer deemed ineligible for an SBA loan. But the notice clarifies that the Final Rule “only changes SBA’s minimum background check requirements” … [and] … does not impact a Lender’s ability to conduct a criminal history background check, following their own policies, provided they do so in a manner that complies with the Equal Credit Opportunity Act and other relevant laws and does not result in an unjustified discriminatory effect on a protected class group”. Therefore, “Lenders can continue to deny loans, for example, where criminal history, when considered along with other information, presents an unacceptable credit risk”.
To make SBA Form 1919 consistent with the regulatory change that took effect on May 30, question 4 has been amended to ask: “Is the Applicant or any Associate of the Applicant currently incarcerated, serving a sentence of imprisonment imposed upon adjudication of guilty, or is under indictment for a felony or any crime involving or relating to financial misconduct or a false statement? (if “Yes” the Applicant is not eligible for SBA financial assistance.)” If an applicant checks “yes” to question 4, it is not eligible for SBA financing, and because this is a regulatory prohibition, SBA cannot approve policy waivers/exceptions to policy.
In addition to the change to question 4, the revised form also includes a new certification (page 4) whereby the applicant “authorizes SBA to release information about existing SBA loans to the Lender processing the loan application to assist with compliance check codes”.
Use of the revised SBA Form 1919 will be mandatory on August 11, 2024. Until that date, applicants can continue to use the version of SBA 1919 that shows an issuance date of 09/2023, but must follow the guidance previously issued by SBA regarding “yes” answers to question 4.
Please see the Final Rule and the referenced notice for complete information.
