For SBA lenders
Short answer
A lender must submit a request to the SBA for a modification to the loan authorization, detailing the unforeseen cost increases and justifying the need for the additional funds. This typically involves updating E-Tran and providing supporting documentation.
Loan authorizations specify the maximum loan amount. If project costs increase unexpectedly, a lender cannot unilaterally increase the loan. A formal request to the SBA is required, which includes a revised project cost breakdown, an explanation of why the costs increased, and updated financial projections if the increase is substantial. The SBA will review the justification and approve or deny the modification.
A $1,000,000 7(a) loan for construction is authorized. During construction, unexpected soil conditions require an additional $50,000 for foundation work. The lender prepares an updated project budget, obtains contractor invoices, and submits a modification request via E-Tran to the SBA, explaining the unforeseen circumstances and requesting the $50,000 increase to the authorized loan amount.
Insider move
Lenders are concerned with ensuring that any increase to the loan amount is justified, properly documented, and approved by the SBA to maintain the guaranty. Disbursing funds above the authorized amount without SBA approval will void the guaranty for the excess amount.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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