The Gourjian Law Blog

Are SBA Loans Dischargeable in Bankruptcy?

by Gourjian Law Group on May 6, 2020

According to the Washington Post, about 70 percent of small businesses have applied for a CARES Act loan. Even though the majority of applicants have not yet received loan proceeds, hundreds of millions of dollars in loans have in fact already been dispersed. These loans have either been in the form of the SBA’s Economic Injury Disaster Loans, or the Paycheck Protection Program.

Although these loans will provide a lifeline to many businesses allowing them to weather this storm, many of them will simply not be able to survive. Business closures, corporate dissolutions, and business and personal bankruptcies are inevitable. 

This raises the question: Are SBA loans dischargeable in a Chapter 7 bankruptcy? The short answer is yes. 

If you are an individual business owner who borrowed an SBA loan, but cannot continue operating your business, call us. SBA loans can be discharged just like any other business loans – assuming of course that the loan was not incurred fraudulently, for example, through misrepresentations on a credit application. 

Our firm has over 20 years of experience representing individual and corporate debtors, creditors, and trustees in Chapter 7 bankruptcy cases. Contact us at (818) 956-0100, or email us at

Topics: Bankruptcy