{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/if-an-eligibility-issue-is-discovered-post-closing-what-is-the-impact-on-the-sba-guaranty","api_url":"https://dealroom.so/api/public/questions/if-an-eligibility-issue-is-discovered-post-closing-what-is-the-impact-on-the-sba-guaranty","question":"If an eligibility issue is discovered post-closing, what is the impact on the SBA guaranty?","topic":"Repairs & denials","audience":"lender","bot_mode":"lender","short_answer":"If a fundamental eligibility issue is discovered post-closing that would have prevented approval, the SBA will generally deny the guaranty in full.","rule":"The lender is responsible for determining the borrower's eligibility for the 7(a) program at the time of loan application and closing. If, post-closing, the SBA discovers that the borrower or business was fundamentally ineligible (e.g., passive business, non-citizen without permanent residency, exceeding size standards), the SBA will deny the guaranty entirely, leaving the lender with a 100% loss.","example":"A lender closes a 7(a) loan for a business, but during a post-closing review, the SBA determines the business was primarily engaged in speculative activities, an ineligible use of proceeds. Despite the loan closing, the SBA will deny its guaranty, deeming the loan ineligible from inception.","what_lenders_check":"Thorough upfront eligibility screening is critical. Any uncertainty regarding eligibility should be resolved with the SBA prior to approval and closing. A guaranty denial is the most severe consequence for a lender.","required_facts":["Eligibility issue","Post-closing discovery","Guaranty denial","Ineligible business","Lender responsibility"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","SOP 50 57 - 7(a) Loan Servicing and Liquidation"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"},{"title":"SOP 50 57 - 7(a) Loan Servicing and Liquidation","url":"https://www.sba.gov/sites/default/files/2025-09/FINAL%20SOP%205057%204%20version.pdf"}],"related_questions":[{"question":"When does a lender's failure to properly monitor collateral value during servicing result in a 7(a) guaranty repair?","url":"https://dealroom.so/for-lenders/questions/when-does-a-lender-s-failure-to-properly-monitor-collateral-value-during-servicing-result-"},{"question":"What specific underwriting failures or omissions by a lender are categorized as 'material non-compliance' by the SBA, risking 7(a) guaranty repair or denial?","url":"https://dealroom.so/for-lenders/questions/what-specific-underwriting-failures-or-omissions-by-a-lender-are-categorized-as-material-n"},{"question":"What constitutes 'material non-compliance' with SBA lending policies that typically leads to a guaranty repair or denial?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-material-non-compliance-with-sba-lending-policies-that-typically-leads-to"},{"question":"Can an SBA 7(a) loan be repaired if the lender failed to ensure the borrower properly used all loan proceeds as authorized?","url":"https://dealroom.so/for-lenders/questions/can-an-sba-7-a-loan-be-repaired-if-the-lender-failed-to-ensure-the-borrower-properly-used-"},{"question":"What specific actions by a lender during loan origination would typically lead to a guaranty denial?","url":"https://dealroom.so/for-lenders/questions/what-specific-actions-by-a-lender-during-loan-origination-would-typically-lead-to-a-guaran"},{"question":"What constitutes a \"repair\" to the SBA guaranty during a purchase request?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-a-repair-to-the-sba-guaranty-during-a-purchase-request"}],"related_terms":[{"term":"Eligibility issue","url":"https://dealroom.so/glossary/eligibility-issue"},{"term":"Call on the guaranty","url":"https://dealroom.so/glossary/call-on-the-guaranty"},{"term":"Post-Closing","url":"https://dealroom.so/glossary/post-closing"},{"term":"Claim on the SBA Guarantee","url":"https://dealroom.so/glossary/claim-on-the-sba-guarantee"},{"term":"Post-closing procedure","url":"https://dealroom.so/glossary/post-closing-procedure"},{"term":"Post-closing event","url":"https://dealroom.so/glossary/post-closing-event"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/for-lenders/questions/if-an-eligibility-issue-is-discovered-post-closing-what-is-the-impact-on-the-sba-guaranty","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}