13 C.F.R. § 120.140

What ethical requirements apply to participants?

Read at: eCFRecfr.gov CornellLII GovInfogovinfo.gov CasesGoogle Scholar

Lenders, Intermediaries, and CDCs (in this section, collectively referred to as “Participants”), must act ethically and exhibit good character. Ethical indiscretion of an Associate of a Participant or a member of a CDC will be attributed to the Participant. A Participant must promptly notify SBA if it obtains information concerning the unethical behavior of an Associate. The following are examples of such unethical behavior. A Participant may not:

(a) Self-deal;

(b) Have a real or apparent conflict of interest with a small business with which it is dealing (including any of its Associates or an Associate's Close Relatives) or SBA;

(c) Own an equity interest in a business that has received or is applying to receive SBA financing (during the term of the loan or within 6 months prior to the loan application);

(d) Be incarcerated, on parole, or on probation;

(e) Knowingly misrepresent or make a false statement to SBA;

(f) Engage in conduct reflecting a lack of business integrity or honesty;

(g) Be a convicted felon, or have an adverse final civil judgment (in a case involving fraud, breach of trust, or other conduct) that would cause the public to question the Participant's business integrity, taking into consideration such factors as the magnitude, repetition, harm caused, and remoteness in time of the activity or activities in question;

(h) Accept funding from any source that restricts, prioritizes, or conditions the types of small businesses that the Participant may assist under an SBA program or that imposes any conditions or requirements upon recipients of SBA assistance inconsistent with SBA's loan programs or regulations;

(i) Fail to disclose to SBA all relationships between the small business and its Associates (including Close Relatives of Associates), the Participant, and/or the lenders financing the Project of which it is aware or should be aware;

(j) Fail to disclose to SBA whether the loan will:

(1) Reduce the exposure of a Participant or an Associate of a Participant in a position to sustain a loss;

(2) Directly or indirectly finance the purchase of real estate, personal property or services (including insurance) from the Participant or an Associate of the Participant;

(3) Repay or refinance a debt due a Participant or an Associate of a Participant; or

(4) Require the small business, or an Associate (including Close Relatives of Associates), to invest in the Participant (except for institutions which require an investment from all members as a condition of membership, such as a Production Credit Association);

(k) Issue a real estate forward commitment to a builder or developer; or

(l) Engage in any activity which taints its objective judgment in evaluating the loan.

[61 FR 3235, Jan. 31, 1996, as amended at 68 FR 57980, Oct. 7, 2003]

Notes of Decisions

Cited in 3 cases (2 in the last 5 years), 2005–2024 · leading case: Alicia Mercurio v. Huntington Nat'l Bank (Mich. Ct. App. 2023).

Sort: Relevance Newest Treatment

Alicia Mercurio v. Huntington Nat'l Bank (Mich. Ct. App. 2023). · cites it 12× “Plaintiff further alleged that 13 CFR 120.140(f) was applicable and imposed a duty on LeFevre to act with integrity and honesty, considering that the loans were guaranteed by the United States Small Business Administration (SBA).”

Triesault v. Greater Salt Lake Bus. Dist., 2005 UT App 489 (Utah Ct. App. 2005). “” 13 C.F.R. § 120.140 (b) (2005). However, the Code does not define what a conflict is, and the broad reading argued by Triesault is unrealistic under the process provided by the SBA for a Section 504 loan.”

Glorycrest Carpenter Road Inc v. Adams Outdoor Advert. Ltd. (Mich. Ct. App. 2024). “In addition, the plaintiff requested that the trial court declare that her personal guaranty was unenforceable (Count I) and that the bank and its vice president owed and breached a legal duty to her under 13 CFR 120.140(f) (Count IV). Id. at __; slip op at 3-4.”

— 13 C.F.R. § 120.140(f) — 2 cases

Alicia Mercurio v. Huntington Nat'l Bank (Mich. Ct. App. 2023). “Plaintiff further alleged that 13 CFR 120.140(f) was applicable and imposed a duty on LeFevre to act with integrity and honesty, considering that the loans were guaranteed by the United States Small Business Administration (SBA).”

Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.