Can SBA loans be forgiven in bankruptcy?
Yes, it is possible.
An SBA loan is a loan that small and medium-sized businesses can apply for when they need start-up/working capital. What makes SBA loans different from other loans is that they must be approved by a federal agency called the US Small Business Administration. Many people think that SBA loans cannot be forgiven in bankruptcy because they are loans that require federal agency approval, but this is not true. Most SBA loans can be forgiven in bankruptcy.
However, keep in mind that the U.S. Small Business Administration keeps a record of all previous SBA loans, so if you have previously forgiven SBA loans due to bankruptcy, it may be difficult to get new SBA loans approved in the future. Those who dream of starting a business should keep this in mind, and if you have any questions about it, we recommend that you seek advice from a bankruptcy attorney.
