For SBA lenders
Short answer
If a lender failed to obtain a required personal guaranty, the SBA will likely repair or deny its guaranty purchase request, as the lender did not follow prudent lending standards or the loan authorization.
The SBA requires personal guaranties from all owners of 20% or more equity in the applicant business. Failure to obtain a required personal guaranty is considered a serious underwriting error and a deviation from prudent lending standards. Upon default, if the SBA discovers this omission, it will likely repair the guaranty, reducing the amount paid to the lender, or deny the claim entirely, especially if the missing guaranty significantly impacts recovery potential.
A lender submits a UPP for a defaulted 7(a) loan. The SBA reviews the file and discovers that one of the 25% owners of the business never executed their personal guaranty. The SBA would repair the guaranty, reducing the amount payable to the lender due to the lack of this required collateral.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 57 - 7(a) Loan Servicing and Liquidation
Universal Purchase Package (UPP)
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.
More on guaranty purchase / upp
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