Glossary · The loan itself
In short
When a defaulted SBA loan is too far gone for the lender to collect, the SBA "buys" the guaranteed portion of the loan from the lender. This kicks off the SBA's own collection efforts.
If your business defaults on an SBA loan and the lender can't recover sufficient funds, they'll submit a "guaranty purchase request" to the SBA. The SBA then pays the lender the guaranteed percentage of the outstanding balance. This doesn't relieve you of your debt; the SBA just takes over collection for the guaranteed part, potentially leading to a "call of the guaranty" and personal collection.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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.
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