For SBA lenders
Short answer
For most defaulted 7(a) loans, the lender must submit a liquidation plan to the SBA within 90 calendar days of the loan's default (when it reaches 90 days past due).
SBA policy requires prompt and aggressive liquidation actions for defaulted loans to mitigate losses. The 90-day deadline ensures that lenders initiate the liquidation process without undue delay. The liquidation plan outlines the lender's strategy for collecting on the loan, including collateral recovery, legal actions, and estimated recovery amounts. Delays in submission without proper justification can result in a guaranty repair or denial.
A $700,000 7(a) loan becomes 90 days past due on October 1st. The lender must submit a comprehensive liquidation plan to the SBA by December 30th, outlining efforts to contact the borrower, assess collateral, and propose a strategy for recovery.
Insider move
Lenders are concerned with adhering to the prescribed timelines for liquidation actions to preserve the SBA guaranty. Failure to submit a timely and comprehensive liquidation plan is a common basis for SBA repairs or denials during the guaranty purchase review.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 57 - 7(a) Loan Servicing and Liquidation
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 liquidation
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