Glossary · The loan itself
In short
If an SBA loan defaults and collateral is liquidated, the SBA and the lender split the recovery proceeds based on their pro-rata share, usually reflecting the SBA's guaranty percentage. This ensures both parties recover losses proportionally.
This concept applies if your business defaults and the lender liquidates collateral. The SBA takes its guaranteed percentage of the loan's loss, not the entire loan. The lender and SBA share any recovered funds based on their respective exposure after liquidation costs.
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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