For SBA lenders
Short answer
The SBA pays the guaranteed portion directly to the secondary market investor (Purchaser) upon approval of the lender's request to honor the guaranty, after the lender submits a complete Universal Purchase Package (UPP).
When a guaranteed loan defaults and the lender requests the SBA to honor its guaranty, the SBA reviews the UPP. If approved, the SBA issues payment for the guaranteed portion directly to the investor who holds the guaranteed interest, not back to the originating lender. The lender, however, receives payment for the unguaranteed portion (if applicable) and continues liquidation efforts.
A 7(a) loan for $1,000,000 with an 85% guaranty ($850,000) was sold on the secondary market. Upon default and approval of the lender's UPP, the SBA sends $850,000 to the secondary market investor, while the lender retains the unguaranteed portion of $150,000 and pursues recovery.
Universal Purchase Package (UPP)
SOP 50 57 - 7(a) Loan Servicing and Liquidation
Request to Honor SBA 7(a) Loan Guaranty
SOP 50 56 - Lender Participation Requirements
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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