{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-specific-representations-and-warranties-must-a-lender-make-when-selling-the-guarantee","api_url":"https://dealroom.so/api/public/questions/what-specific-representations-and-warranties-must-a-lender-make-when-selling-the-guarantee","question":"What specific representations and warranties must a lender make when selling the guaranteed portion of a 7(a) loan?","topic":"Secondary market","audience":"lender","bot_mode":"lender","short_answer":"When selling the guaranteed portion, lenders make representations including valid endorsement, good title, valid guaranty, and compliance with all SBA rules and regulations.","rule":"Upon sale of the guaranteed portion of a 7(a) loan on the secondary market, the lender must provide specific representations and warranties to the purchaser and to the SBA. These typically confirm that the loan was originated and serviced in accordance with all SBA requirements, that the guaranty is valid and enforceable, and that the lender has not misrepresented any material facts.","example":"A lender sells the guaranteed portion of a $1,000,000 7(a) loan. In the loan sale agreement, the lender warrants to the investor that the loan was properly underwritten, closed, and serviced per SBA SOPs, and that the SBA guaranty is in full force and effect without any known impairments.","what_lenders_check":"Lenders must be acutely aware that selling the guaranteed portion does not transfer their underlying responsibility for originating and servicing the loan correctly. Any breach of these warranties, or discovery of non-compliance, could result in the lender being forced to repurchase the guaranteed portion or a guaranty repair.","required_facts":["Secondary market","Guaranteed portion sale","Representations","Warranties","SBA compliance"],"source_families":["SOP 50 56 - Lender Participation Requirements","SOP 50 57 - 7(a) Loan Servicing and Liquidation","13 CFR Part 120 - Business Loans"],"official_sources":[{"title":"SOP 50 56 - Lender Participation Requirements","url":"https://www.sba.gov/sites/default/files/2023-06/WF%20Attachment%20238243%20Final%20Closeout-%20SOP_50_56_6_07_2023_Final_.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":"What are the specific reporting requirements for lenders after selling the guaranteed portion of a 7(a) loan on the secondary market?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-reporting-requirements-for-lenders-after-selling-the-guaranteed-port"},{"question":"What specific ongoing reporting obligations does a 7(a) lender have to the SBA after securitizing and selling the guaranteed portion of a loan on the secondary market?","url":"https://dealroom.so/for-lenders/questions/what-specific-ongoing-reporting-obligations-does-a-7-a-lender-have-to-the-sba-after-securi"},{"question":"What are a lender's ongoing servicing obligations after selling the guaranteed portion of a 7(a) loan on the secondary market?","url":"https://dealroom.so/for-lenders/questions/what-are-a-lender-s-ongoing-servicing-obligations-after-selling-the-guaranteed-portion-of-"},{"question":"What are the requirements for assigning secondary market loans through SBA Form 1088?","url":"https://dealroom.so/for-lenders/questions/what-are-the-requirements-for-assigning-secondary-market-loans-through-sba-form-1088"},{"question":"What are the key requirements for a lender to sell the guaranteed portion of a 7(a) loan on the secondary market?","url":"https://dealroom.so/for-lenders/questions/what-are-the-key-requirements-for-a-lender-to-sell-the-guaranteed-portion-of-a-7-a-loan-on"},{"question":"What specific actions must a lender take if a secondary market investor defaults on purchasing the guaranteed portion of a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-specific-actions-must-a-lender-take-if-a-secondary-market-investor-defaults-on-purcha"}],"related_terms":[{"term":"Representations and warranties","url":"https://dealroom.so/glossary/representations-and-warranties"},{"term":"Guaranteed Portion","url":"https://dealroom.so/glossary/guaranteed-portion"},{"term":"Acceleration of the Note","url":"https://dealroom.so/glossary/acceleration-of-the-note"},{"term":"M&A advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"term":"Specific Lien","url":"https://dealroom.so/glossary/specific-lien"},{"term":"Unguaranteed portion","url":"https://dealroom.so/glossary/unguaranteed-portion"}],"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-specific-representations-and-warranties-must-a-lender-make-when-selling-the-guarantee","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."]}