For SBA lenders
Short answer
Lenders must submit an initial liquidation plan to the SBA within 90 days of loan default, followed by quarterly progress reports.
Upon determining that a 7(a) loan is in uncurable default, the lender must activate its liquidation process. An initial liquidation plan, outlining proposed actions to recover funds, must be submitted to the SBA within 90 calendar days of the initial default date. This ensures prompt action to minimize losses and protects the SBA's guaranty interest.
A $500,000 SBA loan defaults on January 1st. By April 1st, the lender must have developed and submitted a comprehensive liquidation plan to the SBA, detailing steps like collateral valuation, sale strategy, and collection efforts.
Lenders must adhere strictly to reporting timelines to avoid jeopardizing the guaranty. Failure to submit a timely and comprehensive liquidation plan, or to follow approved liquidation procedures, can result in a repair or denial of the guaranty purchase request.
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.
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