Glossary · The loan itself
In short
This is a portion of loan funds set aside specifically to cover unforeseen costs or delays that may arise during a construction or renovation project. It's a mandatory safeguard for such projects.
For 7(a) loans involving new construction or significant leasehold improvements, your lender will typically require a construction contingency reserve, often 10-15% of the construction costs. This money is part of your total project costs but is held back by the lender and disbursed only for approved, unexpected expenses. Factor this into your overall budget.
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
See which SBA lenders would fund your deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to approve a 7(a) like yours and flag what trips up approval.
Free · No documents · Usually same-day