For SBA lenders
Short answer
Before UPP submission, a lender must diligently attempt to collect from all sources, including collateral and guarantors. This includes conducting a thorough collateral analysis, pursuing liquidation strategies, and exhausting all reasonable recovery efforts.
Upon default, the lender is responsible for prudent liquidation of the loan to minimize loss to the SBA. This involves evaluating collateral, marketing and selling assets, pursuing personal and corporate guarantors, and taking appropriate legal action. The lender must demonstrate these efforts in the UPP, as failure to act prudently in liquidation can lead to a guaranty repair or denial.
After a $750,000 7(a) loan defaults, the lender hires an asset recovery specialist to sell business equipment, files suit against the personal guarantors, and liquidates accounts receivable. All these actions are documented before preparing the UPP.
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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