SBA loan basics
Short answer
The SBA guarantee covers only a portion of the loan amount, not the entire loan. The percentage guaranteed depends on the loan size.
For most 7(a) loans, the SBA guarantees 85% of loans up to $150,000 and 75% of loans above $150,000, up to the maximum loan amount of $5 million. This partial guarantee encourages lenders to take on more risk while still requiring them to bear some of the risk.
A bank makes a $300,000 SBA 7(a) loan. The SBA guarantees 75% of this, which is $225,000. If the borrower defaults and the bank can only recover $50,000 after liquidating collateral, the SBA would pay the bank the guaranteed amount (up to $225,000, less any pro-rata share of recoveries).
Insider move
Lenders understand that they still retain a significant portion of the risk (15-25%), which motivates them to thoroughly underwrite loans and perform diligent servicing and liquidation efforts.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
SBA 7(a) Loans Overview
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. 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.
More on what 'guaranty' means
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day