For SBA lenders
Short answer
If a condition precedent to closing specified in the SBA loan authorization is not met, the lender cannot close and disburse the loan until the condition is satisfied or a modification is approved by the SBA.
The SBA loan authorization outlines all terms, conditions, and requirements for the loan, including conditions that must be met prior to closing. These conditions are binding, and proceeding without satisfying them or obtaining a modification can lead to a guaranty denial or repair.
An authorization requires the borrower to provide proof of a $100,000 equity injection prior to closing. If, at the closing table, the borrower only has $75,000, the lender cannot close the loan. They must either wait for the full injection or seek SBA approval for a modification to the authorization.
Insider move
Lenders must meticulously track and ensure all conditions precedent are met before closing. Any deviation requires formal modification approval from the SBA, highlighting the importance of clear communication and documentation.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
Standard 7(a) Authorization File Library
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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