For SBA lenders
Short answer
A 'repair' reduces the amount the SBA will pay on its guaranty by the amount of the loss directly attributable to the lender's non-compliance or error.
When the SBA identifies a non-curable defect or non-compliance with its regulations or prudent lending standards, it may 'repair' the guaranty. This means the SBA will not pay the lender the full guaranteed percentage but will instead reduce its payment by the amount of the loss that was caused by the lender's error. For example, if a $10,000 loss was due to a lender error, the SBA might reduce its 75% guaranty payment on a $100,000 loss from $75,000 to $65,000.
A lender experiences a $100,000 loss on a 75% guaranteed loan. During the guaranty purchase review, the SBA finds the lender failed to properly perfect a lien on collateral valued at $15,000. The SBA repairs the guaranty, reducing its payout by $15,000, meaning the lender only receives $60,000 instead of $75,000.
Insider move
Lenders must understand that repairs shift a portion of the loss back to them. This emphasizes the importance of strict adherence to SBA regulations and prudent lending practices throughout the loan's lifecycle to protect the full value 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
Universal Purchase Package (UPP)
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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