For SBA lenders
Short answer
A material change is any alteration to the business's structure, ownership, collateral, or loan terms that significantly affects the credit risk or deviates from the original loan authorization, generally requiring prior SBA consent.
SOP 50 57 and 13 CFR 120 emphasize that lenders must adhere to the original loan authorization and SBA policies. Material changes, such as a change in ownership, assumption of the loan by a new entity, release of significant collateral, or major changes to the use of proceeds, can jeopardize the guaranty if not approved by the SBA in advance.
After closing, a borrower decides to sell 51% of their business to a new partner. The lender allows this without seeking prior SBA approval. Upon default, the SBA discovers the unapproved material change and issues a repair or denial of the guaranty.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 57 - 7(a) Loan Servicing and Liquidation
SOP 50 10 - Lender and Development Company Loan Programs
Servicing and Liquidation Actions 7(a) Lender Matrix
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.
More on repairs & denials
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day