{"ok":true,"canonical_url":"https://dealroom.so/glossary/default-provision","api_url":"https://dealroom.so/api/public/glossary/default-provision","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"default-provision","term":"Default Provision","group":"The loan itself","definition":"This clause in your loan agreement outlines specific events or failures that trigger a loan default, allowing the lender to demand immediate repayment. You need to understand what constitutes a default to avoid losing the business.","what_it_means":"A default provision details scenarios like missing payments, failing to maintain insurance, or breaching covenants. In an SBA 7(a) loan, if you default, the lender will first try to work with you, but ultimately can seize collateral or call your personal guarantee. Know these terms before you sign.","url":"https://dealroom.so/glossary/default-provision","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"loan-agreement","term":"Loan agreement","url":"https://dealroom.so/glossary/loan-agreement"},{"slug":"personal-guarantee","term":"Personal guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral","term":"Collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"liquidation-plan","term":"Liquidation Plan","url":"https://dealroom.so/glossary/liquidation-plan"}],"related_questions":[{"question":"What happens if I default on an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/what-happens-if-i-default-on-an-sba-7-a-loan"},{"question":"How does a lender request an SBA guaranty purchase after loan default?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-request-an-sba-guaranty-purchase-after-loan-default"},{"question":"Does a business acquisition involving an earn-out provision complicate SBA 7(a) loan approval?","url":"https://dealroom.so/sba-7a/questions/does-a-business-acquisition-involving-an-earn-out-provision-complicate-sba-7-a-loan-approv"},{"question":"Can an earn-out provision in the purchase agreement affect my SBA 7(a) loan approval?","url":"https://dealroom.so/sba-7a/questions/can-an-earn-out-provision-in-the-purchase-agreement-affect-my-sba-7-a-loan-approval"},{"question":"How does an earn-out provision affect an SBA 7(a) loan for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/how-does-an-earn-out-provision-affect-an-sba-7-a-loan-for-a-business-acquisition"},{"question":"Can a partial standby seller note include a provision for interest payments during the standby period?","url":"https://dealroom.so/for-lenders/questions/can-a-partial-standby-seller-note-include-a-provision-for-interest-payments-during-the-sta"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Default Provision","url":"https://dealroom.so/glossary/default-provision","source_type":"DealRoom Data"}}