{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-if-a-lender-s-internal-loan-review-discovers-a-potential-eligibility-issue-post-closi","api_url":"https://dealroom.so/api/public/questions/what-if-a-lender-s-internal-loan-review-discovers-a-potential-eligibility-issue-post-closi","question":"What if a lender's internal loan review discovers a potential eligibility issue post-closing?","topic":"Repairs & denials","audience":"lender","bot_mode":"lender","short_answer":"If a potential eligibility issue is discovered post-closing, the lender must promptly notify the SBA, which will then review the issue and determine if a guaranty repair or denial is warranted.","rule":"Lenders are responsible for ensuring eligibility throughout the loan's lifecycle. If an eligibility issue (e.g., borrower misrepresentation, undisclosed affiliation, ineligible use of proceeds) is discovered after closing, the lender has an obligation to report it to the SBA. The SBA will then conduct its own review to assess the materiality of the issue and determine the impact on the guaranty, which could range from a repair to a full denial.","example":"Six months after closing a $1,000,000 7(a) loan, an internal audit reveals that the borrower, unbeknownst to the lender during origination, had an undisclosed affiliate that made the combined entity exceed the SBA size standard. The lender must immediately inform the SBA, which would then evaluate the facts and likely deny the guaranty due to ineligibility at origination.","what_lenders_check":"Lenders must have robust post-closing review processes. Hiding or failing to report eligibility issues, once known, can lead to severe penalties. Proactive disclosure, while potentially leading to a repair, is preferable to a full denial for non-disclosure or concealment.","required_facts":["Eligibility issue","Post-closing discovery","Lender notification","Guaranty repair","SBA review"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","SOP 50 57 - 7(a) Loan Servicing and Liquidation","13 CFR Part 120 - Business Loans"],"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":"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"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"}],"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":"Post-closing review","url":"https://dealroom.so/glossary/post-closing-review"},{"term":"Eligibility issue","url":"https://dealroom.so/glossary/eligibility-issue"},{"term":"Post-Closing","url":"https://dealroom.so/glossary/post-closing"},{"term":"Post-closing procedure","url":"https://dealroom.so/glossary/post-closing-procedure"},{"term":"Post-closing event","url":"https://dealroom.so/glossary/post-closing-event"},{"term":"Post-Closing Training","url":"https://dealroom.so/glossary/post-closing-training"}],"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/what-if-a-lender-s-internal-loan-review-discovers-a-potential-eligibility-issue-post-closi","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."]}