Can you declare bankruptcy on a Small Business Administration (SBA) loan?

While the common perception is that you cannot discharge government loans in bankruptcy, in reality, many such loans can be discharged in bankruptcy.  The Small Business Administration (SBA) does not directly make loans; rather, it guarantees at least a portion of the loans, which reduces the risk of liability should the loan go into default.  Therefore, SBA loans are dischargeable in bankruptcy proceedings.

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