For SBA lenders
SBA 7(a) questions for lenders
Operational answers for loan officers, credit, and closing teams — eligibility, equity injection, change-of-ownership files, servicing, and guaranty purchase — each grounded in the current SBA rulebook with the controlling sources.
Affiliation & Guaranty (1)
Affiliation & size (56)
- When does a contractual relationship between two businesses trigger affiliation for size standard calculations?
- How does ownership of options or warrants affect affiliation determination for SBA size standards?
- What are the size standard requirements for a business applying for a 7(a) loan if it operates internationally?
- What specific scenarios involving shared directors, officers, or key employees constitute 'common management' triggering affiliation for SBA size determination?
- Under what conditions does a shared economic interest trigger affiliation for SBA size standard purposes?
- How does the 'totality of the circumstances' rule apply when determining affiliation for SBA size standards?
- When does ownership by a private equity fund trigger affiliation for SBA size standard purposes?
- How does a lender determine affiliation for size purposes when evaluating common economic dependence?
- What constitutes 'common management' triggering affiliation for SBA 7(a) size determination?
- What specific documentation is required for a business to qualify as 'small' under the alternative size standard?
- How does the SBA define an "associate" for affiliation purposes under 13 CFR 121?
- How does the SBA define "small business" for size standard purposes?
- When does common ownership by an Employee Stock Ownership Plan (ESOP) trigger affiliation for size determination?
- How does the "franchise rule" specifically apply to determine affiliation for an independent dealer or licensee model?
- Under what specific conditions can two businesses with common ownership but distinct operations avoid affiliation for size purposes?
- What specific documentation is required for a business to be considered 'small' under the alternative size standard?
- How does the SBA determine affiliation between two businesses if they share common management but no common ownership?
- What specific criteria must be met for a joint venture to be exempt from affiliation rules for a 7(a) loan?
- When does a shared resource agreement create affiliation for SBA size standard calculations?
- What specific factors trigger affiliation for size standards based on common management, officers, or directors?
- How does the SBA define 'total control' rule to determine affiliation for size standards?
- What if a business exceeds the SBA size standard based on revenue but not employees?
- When does a prior contractual relationship create affiliation for 7(a) size determination?
- What is the maximum loan amount an affiliated group of businesses can receive under the 7(a) program?
- When does a shared management team between two entities trigger affiliation for SBA size standards?
- How does the 'franchise rule' affect affiliation calculations for SBA 7(a) eligibility?
- What is the maximum tangible net worth for a business to be considered 'small' under the alternative size standard?
- How does the SBA determine affiliation between businesses controlled by a common trust?
- What are the implications for a lender if the SBA discovers an undisclosed affiliate post-closing on a 7(a) loan?
- What specific criteria determine if two businesses are affiliated due to 'identity of interest' for size standards?
- How does a lender handle an SBA 7(a) loan where the borrower intends to lease property from an affiliate?
- How does the SBA determine if multiple businesses are affiliated for size standard purposes based on common ownership?
- How does the SBA define an 'associate' for affiliation purposes under 13 CFR 121, beyond direct ownership?
- How does the 'control' principle specifically trigger affiliation for purposes of determining a business's size standard?
- When does identity of interest trigger affiliation for size determination under SBA rules?
- How does the "control" principle trigger affiliation for purposes of determining a business's size standard?
- When does a shared familial relationship between business owners automatically trigger affiliation for SBA size standard calculations?
- How does the SBA differentiate between a general partner and a limited partner for personal guaranty requirements?
- What specific factors trigger affiliation for common management for 7(a) size standards?
- When does a convertible note held by an investor trigger affiliation for size standards?
- How does the SBA determine affiliation for businesses operating under a license agreement?
- What due diligence is required to assess affiliation when a borrower owns a minority stake in other businesses?
- How does SBA define an 'associate' for affiliation purposes under 13 CFR 121, impacting size determination?
- How do shared administrative services, like HR or accounting, automatically trigger affiliation for size determination?
- Under what conditions does ownership by a private equity fund trigger affiliation for SBA size standard purposes?
- When does an unexercised option to acquire ownership in a business trigger affiliation for SBA size standard purposes?
- Does a shared commercial lease agreement between two separate businesses trigger affiliation for SBA size standards?
- When does a 'close family relationship' between owners of separate businesses trigger identity of interest affiliation for SBA 7(a) loans?
- How are common officers or shared key employees between businesses evaluated for affiliation under SBA size standards?
- What are the current size standards for a manufacturing business to be eligible for a 7(a) loan?
- When can a minority equity stake still create affiliation for size purposes?
- What is the definition of "control" for affiliation purposes in a 7(a) loan application?
- How does the SBA determine "common control" when assessing affiliation for a management company providing services?
- How does the SBA determine if a business is considered "small" for eligibility based on its NAICS code?
- Beyond common officers/directors, how does a lender assess affiliation through "shared key employee functions" for SBA size standards?
- How does a lender determine affiliation for SBA size purposes when a business is controlled by a trust or estate?
Affiliation & Size (23)
- When does common management or shared facilities trigger affiliation for SBA 7(a) size determination?
- What factors are considered when evaluating affiliation between businesses that share common management?
- What are the financial criteria for a business to qualify as 'small' under the alternative size standard?
- Does an unfunded stock option agreement trigger affiliation for SBA 7(a) size standard calculations?
- What criteria does the SBA use to determine common management that triggers affiliation for size standard purposes?
- How does a lender determine affiliation when a prior owner retains less than 20% equity and a consulting contract?
- What are the specific thresholds or rules for determining affiliation based on common management, beyond direct ownership?
- When does a franchisor's influence, even without ownership, trigger affiliation for the franchisee?
- How does common management trigger affiliation for size standard purposes?
- When does a minority equity stake still create affiliation for size purposes?
- What are the current size standards for a manufacturing business eligibility?
- Does sharing common administrative services, like HR or accounting, automatically trigger affiliation for size determination?
- Does a shared familial relationship between business owners automatically trigger affiliation for SBA size standard calculations?
- When does a minority equity stake still create affiliation for SBA size purposes?
- How do shared investors in multiple entities trigger affiliation for SBA size standard calculations?
- What is the specific look-back period for prior ownership interests when determining affiliation for a 7(a) loan?
- When does common ownership through a trust or estate create affiliation for size purposes?
- Are businesses with shared facilities or equipment considered affiliated for SBA size standards?
- What specific conditions trigger affiliation due to contractual relationships or franchise agreements?
- When does familial relationship between owners of separate businesses trigger affiliation for size?
- What if a business exceeds the SBA size standard at application but projects to be small post-acquisition?
- What is the key impact of 'affiliation' on determining a business's eligibility for an SBA 7(a) loan?
- How does the SBA determine 'small business' size for an applicant with multiple affiliated entities?
Base rates (22)
- When is the use of the Wall Street Journal Prime Rate as the base rate mandatory for a variable rate 7(a) loan, if ever?
- What are the current allowable alternative base rate options for variable rate 7(a) loans, besides Prime Rate?
- What is the specific maximum interest rate a lender can charge on a variable rate 7(a) loan?
- Can a lender unilaterally increase the interest rate on a variable rate 7(a) loan?
- What are the current alternative base rate options for variable rate 7(a) loans?
- How are variable interest rate adjustments determined for an SBA 7(a) loan?
- Can a lender change the base rate option (e.g., from Prime to SOFR) for a variable rate 7(a) loan after closing?
- What are the permitted alternative base rate options for variable-rate 7(a) loans beyond the Prime Rate?
- What specific documentation is required to formally transition an authorized 7(a) loan from one permissible base rate to another?
- How often can a lender adjust the interest rate on a variable rate 7(a) loan tied to the Prime Rate?
- What specific alternative base rates are permissible for variable rate 7(a) loans?
- How does a lender determine the maximum allowable interest rate for a variable-rate 7(a) loan tied to the WSJ Prime?
- What are the specific requirements for an alternative base rate, like SOFR, to be used for a 7(a) variable rate loan?
- What are the current alternative base rate options available for variable rate 7(a) loans?
- How must a lender document the chosen base rate for a variable rate 7(a) loan in the loan authorization?
- How do lenders determine the maximum allowable interest rate for a variable rate 7(a) loan?
- How is the interest rate cap determined for a variable rate 7(a) loan?
- What are the permissible alternative base rate options for variable-rate 7(a) loans besides the Wall Street Journal Prime?
- What are the maximum allowable interest rates for variable rate 7(a) loans, including the permissible spread?
- When is the use of a fixed interest rate permitted for an SBA 7(a) loan?
- Can a 7(a) lender unilaterally increase the interest rate on a variable rate loan during its term?
- When a variable rate 7(a) loan is approved, how frequently can the lender adjust the interest rate?
Base Rates (12)
- How does a lender determine which alternative base rate to use for a variable rate 7(a) loan?
- What are the acceptable alternative base rate options for variable-rate 7(a) loans, besides the Wall Street Journal Prime rate?
- How should a lender handle the transition of an existing variable-rate 7(a) loan from LIBOR to an alternative base rate?
- If a lender wishes to use SOFR as a base rate for a variable rate 7(a) loan, what specific documentation is required?
- What are the specific notification requirements for a lender when adjusting the interest rate on a variable rate 7(a) loan?
- What alternative base rate options are available for variable rate 7(a) loans?
- What are the current alternative base rate options for variable rate 7(a) loans, besides Prime Rate?
- What factors should a lender consider when choosing an alternative base rate for a variable-rate 7(a) loan?
- Can a lender unilaterally increase the interest rate on a variable rate 7(a) loan during its term?
- What are the currently approved base rate options for variable rate 7(a) loans?
- Can a lender change the base rate option for a variable rate 7(a) loan after closing?
- What alternative base rates are available for variable-rate 7(a) loans besides the Wall Street Journal Prime rate?
Change of Ownership Underwriting (4)
- What specific due diligence is required for seller financing in a change of ownership?
- How does the SBA evaluate goodwill in a business acquisition?
- What valuation method is required for an SBA 7(a) acquisition loan over $500,000?
- Can an SBA 7(a) loan be used to finance a new partner buying into an existing business?
Change-of-ownership (4)
- What specific considerations apply to valuing goodwill and intangible assets in a 7(a) change-of-ownership transaction?
- When is a business valuation report required for a 7(a) change of ownership transaction, and who must perform it?
- What is the maximum loan term allowed for a 7(a) loan used solely for working capital or equipment, without real estate?
- How does the SBA account for an earn-out provision in a business acquisition for 7(a) loan purposes?
Change-of-Ownership (2)
Change-of-ownership underwriting (59)
- How does a lender evaluate the reasonableness of a business purchase price when the seller note is fully subordinated?
- What are the specific requirements for valuing inventory and equipment in a business acquisition for a 7(a) loan?
- When is an independent business appraisal mandatory for a 7(a) loan financing a business acquisition with a purchase price over $500,000?
- How does the SBA view a change of ownership where the new owner has no prior industry experience?
- Is an independent business appraisal required for a 7(a) loan financing a business acquisition with a purchase price exactly $500,000?
- When must a lender require an independent business valuation for a change of ownership 7(a) loan, and what are the specific thresholds?
- What due diligence must a lender perform regarding the seller's existing debt and liabilities in a 7(a) business acquisition?
- What constitutes an acceptable 'arm's length transaction' for a change of ownership between related parties for a 7(a) loan?
- When is a lender required to obtain a subordination agreement for existing business debt that is not being refinanced by a 7(a) loan?
- What specific due diligence is required when a 7(a) loan finances a change of ownership where the buyer is a former employee?
- What is required if the seller in a change-of-ownership 7(a) loan transaction retains a minority equity stake?
- What happens if a seller withdraws from the sale agreement during the SBA loan underwriting process?
- What factors should a lender assess regarding a seller's post-closing consulting agreement in a change of ownership?
- Can a 7(a) loan be approved for a business acquiring only a segment or division of a larger business?
- How does a lender underwrite a business acquisition with existing deferred revenue or unearned income?
- When is a business valuation required for a change-of-ownership 7(a) loan?
- How does the SBA handle a seller's retained ownership in a change-of-ownership transaction?
- What are the main points a lender considers when evaluating management experience for a 7(a) acquisition loan?
- How does the SBA handle situations where the seller desires to remain as a paid consultant post-closing?
- How does the SBA view an earn-out provision in a business acquisition for a 7(a) loan?
- What information does the SBA 7(a) loan program require for business continuity after an acquisition?
- What happens if a major change in the acquired business's legal entity structure occurs after SBA loan approval?
- What specific due diligence is required from the lender when the buyer is acquiring a business from an immediate family member?
- What if a significant portion of the business's historical revenue came from a single, concentrated customer that will not transfer to the new owner?
- When underwriting a business acquisition, how does a lender assess the impact of a significant decline in the acquired business's revenue in the year prior to application?
- What specific due diligence is required from a lender if the business being acquired has significant customer concentration?
- What is the lender's process for underwriting a change of ownership with an earn-out provision?
- What if the seller remains as a passive investor with a minority equity stake in an acquisition?
- How does a lender assess deferred maintenance or capital expenditure needs of an acquired business?
- When is a debt service coverage ratio waiver or exception possible for an acquisition?
- When is a business appraisal required for a change of ownership transaction exceeding $500,000?
- How does seller financing structure impact the required equity injection for a business acquisition?
- What specific diligence must a lender perform on seller's financials for a 7(a) acquisition loan?
- Can a 7(a) loan finance a partial buyout where the seller retains a minority stake and remains active?
- What specific documentation is required from the seller for a 7(a) change-of-ownership transaction?
- When does the SBA require an independent business appraisal for a change-of-ownership if the loan amount is under $500,000?
- How does a lender verify experience for a borrower with limited direct industry background for a 7(a) acquisition loan?
- When does the SBA permit a 7(a) loan to finance a partial buyout where the seller retains a significant ownership stake?
- When is a business valuation specifically required for a change-of-ownership 7(a) loan?
- What happens if a business real estate is owned separately by the seller, and the buyer intends to lease it after an acquisition?
- If the business I'm buying has a temporary decline in revenue during the due diligence period, will it kill the deal?
- When is a business valuation required for a change of ownership transaction exceeding $500,000?
- What specific due diligence is needed for seller financing that is not on full standby?
- How does a lender evaluate a change of ownership where the buyer is a former manager of the acquired business?
- If the business I'm acquiring leases its property from an entity I also own, not the seller, how does this impact my 7(a) loan?
- What specific additional due diligence is required for a 7(a) loan involving a change of ownership between related parties?
- How does a lender underwrite a 7(a) business acquisition where a significant portion of the assets are intangible, such as proprietary software?
- Can a 7(a) loan finance the purchase of a business that relies heavily on a single key customer for its revenue?
- What if an SBA 7(a) loan is for a business acquisition, and the seller has an existing SBA loan for the same business?
- If the business valuation comes in lower than the agreed-upon purchase price, what happens in an SBA 7(a) acquisition?
- What are the minimum requirements for an acceptable business valuation in a 7(a) change-of-ownership transaction?
- Does the SBA allow a 7(a) loan to finance the acquisition of a business from an immediate family member?
- Can a 7(a) loan be used to pay out a portion of the seller's equity at closing, even if they remain a minority owner?
- What is the primary factor the SBA considers when evaluating management experience for a new business acquisition?
- How does the SBA treat an earn-out provision in a business acquisition for determining the loan amount and equity injection?
- What specific limitations must a lender impose on a seller's post-closing consulting agreement to ensure it does not imply retained control or undue influence?
- How does a lender assess the impact of a significant decline in the seller's historical revenue or profitability on a 7(a) acquisition?
- Can an existing lawsuit against the business a borrower is buying kill their SBA 7(a) loan approval?
- Can an SBA 7(a) working capital loan be used to pay off existing accounts payable of the acquired business at closing?
Change-of-Ownership Underwriting (19)
- What specific due diligence is required for a 7(a) loan involving a change of ownership between related parties?
- How does a lender evaluate the management experience of a buyer who has no prior experience in the target industry?
- What happens if the business being acquired has significant outstanding tax liabilities at closing?
- When is an independent business appraisal required for a change of ownership transaction exceeding $500,000?
- How does the SBA evaluate the reasonableness of goodwill in a 7(a) change-of-ownership transaction?
- What is the primary factor in determining SBA 7(a) loan eligibility for a business acquisition when the seller retains a minority equity stake?
- What specific cash flow analysis adjustments are required for a change-of-ownership with a full standby seller note?
- When must a lender obtain an independent business valuation for a change-of-ownership between $250,000 and $500,000?
- What are the specific requirements for a lender to obtain an independent business valuation for a change-of-ownership exceeding $500,000?
- How does the SBA handle a seller's retained ownership in a 7(a) change-of-ownership transaction?
- What are the specific requirements for the seller in an SBA 7(a) business acquisition loan?
- What if a seller of a business retains a minority equity stake in the company after a 7(a) acquisition?
- How does a lender underwrite the value of inventory included in an SBA 7(a) business acquisition?
- What specific representations and warranties does the SBA expect in a purchase agreement for a change-of-ownership loan?
- How is goodwill valued and underwritten in a change of ownership acquisition for a 7(a) loan?
- What if the seller of a business remains a key employee after closing for a critical transition period?
- What specific due diligence is required for accounts receivable included in a business acquisition?
- How does a lender evaluate the reasonableness of the purchase price allocation for a 7(a) acquisition?
- Can an earn-out provision in a purchase agreement affect 7(a) loan eligibility or structure?
Citizenship & residency (4)
- How does a lender verify U.S. citizenship or legal permanent residency for a 7(a) loan applicant?
- What specific residency requirements must a non-citizen owner meet for 7(a) loan eligibility?
- When can a business with a non-citizen spouse of a U.S. citizen owner be eligible?
- What specific documentation is required from a U.S. permanent resident to establish eligibility for a 7(a) loan?
Citizenship & Residency (8)
- What specific documentation is required to verify citizenship or qualified non-citizen status for 7(a) loan applicants?
- When can a non-citizen individual who is not a lawful permanent resident be an eligible 7(a) loan applicant?
- How does a lender confirm proper U.S. residency status for an owner holding a Green Card for a 7(a) loan?
- How does a lender confirm an owner's U.S. citizenship if they were born in a U.S. territory or abroad to U.S. parents?
- What happens if an owner's residency status changes during the application process, requiring an E-Tran update?
- Can a Qualified Alien without permanent residency obtain an SBA 7(a) loan?
- What documentation proves U.S. citizenship or Qualified Alien status for owners?
- Is an individual without permanent resident status, but with a valid U.S. work visa, eligible for a 7(a) loan?
Citizenship/residency (24)
- How does the lender verify the eligibility of an applicant who is a lawful permanent resident, including specific documentation requirements?
- If a key management employee who is not an owner is a foreign national, does this affect SBA 7(a) loan eligibility?
- For a business owned by a trust, what citizenship and residency requirements apply to the trustee for 7(a) eligibility?
- How does a lender verify the lawful permanent resident status of a non-citizen applicant?
- What are the citizenship or residency requirements for a 7(a) loan applicant?
- Can a non-U.S. citizen individual with an E-2 investor visa be an eligible applicant for a 7(a) loan?
- Can an individual with Deferred Action for Childhood Arrivals (DACA) status be an eligible personal guarantor for a 7(a) loan?
- How does an SBA lender verify the U.S. citizenship or lawful permanent resident status of a 20%+ owner?
- Are U.S. citizens residing abroad eligible to apply for an SBA 7(a) loan?
- What types of non-citizen legal residency status are acceptable for SBA 7(a) loan applicants?
- Can a business owner with a valid E-2 investor visa meet the citizenship or residency requirements for a 7(a) loan?
- Are specific visa types, other than LPR, acceptable for a non-U.S. citizen owner to be eligible for an SBA 7(a) loan?
- What specific visa types, if any, are acceptable for a non-U.S. citizen owner to be eligible for an SBA 7(a) loan?
- What is the required citizenship or residency status for all individuals owning 20% or more of an applicant business?
- What specific documentation must a lender collect to verify the legal residency status of a lawful permanent resident owner?
- What factors allow a non-owner spouse to be exempt from personally guaranteeing a 7(a) loan?
- What specific requirements apply to a borrower's credit history when evaluating eligibility for a 7(a) loan?
- What specific documentation is required to verify a non-citizen owner's lawful permanent resident status?
- If a key non-owner employee is a foreign national, does this affect loan eligibility?
- Can a foreign national who is not a U.S. citizen or LPR serve as a personal guarantor on a 7(a) loan?
- Can a business owned by a trust be eligible for a 7(a) loan if the trustee is a foreign national?
- How does a lender verify the "U.S. Citizenship or Lawful Permanent Resident" status on SBA Form 1919?
- What specific documentation is required for a lender to verify U.S. citizenship if an owner was born in a U.S. territory or abroad to U.S. parents?
- What specific documentation is required from a lender to verify the U.S. citizenship of an owner who also holds citizenship in another country?
Citizenship/Residency (6)
- What are specific requirements for a U.S. citizen residing abroad to be an eligible 7(a) borrower?
- Can a foreign corporation own a minority (less than 20%) stake in an SBA 7(a) loan applicant business?
- How does the SBA verify U.S. citizenship for an owner who also holds citizenship in another country for a 7(a) loan?
- What documentation must a lender collect to verify a lawful permanent resident's eligibility for an SBA 7(a) loan?
- Are specific visa types acceptable for a non-U.S. citizen owner to be eligible for an SBA 7(a) loan?
- Can a U.S. Green Card holder (Permanent Resident) be an eligible applicant for a 7(a) loan?
Collateral & lien (4)
- What are the SBA's requirements for obtaining an enforceable first lien position on a 7(a) loan's business assets?
- Under what specific conditions must a lender take a lien on personal real estate as additional collateral for a 7(a) loan?
- How does the SBA determine if a lender has met the
- What are the specific requirements for a lender to release collateral on a 7(a) loan during its term?
Collateral & lien requirements (42)
- What are the specific requirements for securing a lien on titled vehicles as collateral for a 7(a) loan?
- When can a lender justify accepting less than a 100% lien position on available business collateral for a 7(a) loan?
- How does the SBA require lenders to perfect security interests on accounts receivable and inventory?
- What specific collateral must be taken when a 7(a) loan is under-collateralized by business assets, even with a blanket lien?
- What are the specific lien priority requirements for lenders on both business and personal collateral securing a 7(a) loan, particularly when junior liens exist?
- What are the specific triggers for a lender to obtain an independent appraisal of business real estate for a 7(a) loan, based on loan amount thresholds?
- How does a lender perfect its lien on a security interest in a business's intellectual property for a 7(a) loan?
- How does a lender determine if personal real estate collateral is required for a 7(a) loan when business assets are insufficient?
- When does a lender require prior SBA approval for a voluntary collateral substitution on a 7(a) loan?
- How does the SBA 7(a) loan program value and take collateral on accounts receivable from government contracts?
- When is a leasehold mortgage acceptable as collateral for an SBA 7(a) loan?
- What specific conditions dictate when personal real estate collateral is required for a 7(a) loan?
- What are the general collateral requirements for an SBA 7(a) loan?
- What is the SBA's general requirement for lien position on business collateral?
- What happens if business assets are insufficient to fully collateralize the SBA 7(a) loan?
- Can a lender accept a blanket lien on all business assets as primary collateral for an SBA 7(a) loan?
- How does the SBA view a second lien position on real estate collateral for a 7(a) loan?
- If a 7(a) loan is fully secured by business assets, can the lender waive taking a lien on available personal real estate?
- Can a 7(a) loan be secured by a lien on intellectual property alone if tangible assets are minimal?
- What if the business assets are located in multiple states, requiring multiple UCC filings?
- When must a lender take a lien on specific equipment for collateral, beyond a blanket lien?
- What if a business primarily operates virtually with no physical assets for collateral?
- What are the SBA's requirements for obtaining a first lien position on all principal business assets?
- When is a lien on personal real estate required as additional collateral for a 7(a) loan?
- How does a lender perfect a security interest in intellectual property for a 7(a) loan?
- What if the borrower's total business assets do not provide full collateral coverage for the 7(a) loan?
- What are the key differences in collateral requirements for a 7(a) Small Loan versus a standard 7(a) loan?
- What are the minimum collateral requirements for an SBA 7(a) loan exceeding $50,000 when business assets are insufficient to cover the loan?
- When is a lender required to take a lien on available personal real estate for a loan under $500,000?
- How does a lender perfect a lien on intellectual property as collateral for a 7(a) loan?
- What constitutes sufficient collateral when a 7(a) loan is primarily for working capital with few hard assets?
- If a lender obtains a blanket lien, what are the key UCC filing requirements for interstate operations?
- What are the SBA's requirements for subordinating its lien position to another creditor on a 7(a) loan?
- What are the SBA's requirements for obtaining an independent appraisal of non-real estate business collateral for a 7(a) loan?
- What if the collateral for a 7(a) loan includes accounts receivable from government contracts?
- What is the required lien position on collateral for a 7(a) loan, especially when other lenders are involved?
- How does the SBA assess collateral requirements for an SBA Express loan compared to a standard 7(a) loan?
- What due diligence is required for a 7(a) loan where the business real estate is leased, and a significant portion of the loan finances leasehold improvements?
- Can a lender accept a junior lien position on non-real estate business assets as collateral for an SBA 7(a) loan?
- When is a blanket lien on all business assets *insufficient* as primary collateral for an SBA 7(a) loan, requiring additional security?
- What are the general collateral requirements for an SBA 7(a) loan, beyond taking a blanket lien?
- What is the primary objective of the personal guaranty requirement for all 20% or more owners on an SBA 7(a) loan?
Collateral & Lien Requirements (26)
- How does a lender determine if a blanket lien on all business assets is sufficient collateral for a 7(a) loan?
- What specific actions must a lender take to perfect a lien on intellectual property, such as patents or trademarks?
- When can a lender waive the requirement for a lien on readily marketable personal assets of a guarantor?
- What specific documentation is required to properly collateralize life insurance on key principals for a 7(a) loan?
- When is a lender permitted to take a second lien position on specific assets for a 7(a) loan?
- Under what circumstances can a lender waive a required personal guaranty for a 7(a) loan principal?
- What criteria justify a lender waiving a lien on readily marketable personal assets from a guarantor?
- Is a blanket lien on all business assets always required for a 7(a) loan, regardless of loan size or asset value?
- Is personal real estate always required as additional collateral for a 7(a) loan when business assets are insufficient?
- How does a lender perfect a lien on intangible assets such as customer lists or proprietary software for a 7(a) loan?
- What are the specific requirements for a lender to obtain a valid first lien position on UCC collateral when prior liens exist?
- When is personal real estate required as additional collateral for a 7(a) loan with a business asset shortfall?
- What are the minimum collateral requirements for a 7(a) loan over $50,000?
- Is a UCC-1 filing sufficient to perfect a lien on business assets?
- Can personal real estate be required as collateral for a $200,000 7(a) loan?
- What happens if my current personal residence is already heavily mortgaged; will that prevent an SBA loan if collateral is required?
- How does the SBA 7(a) loan program value and take collateral on proprietary software assets for a tech company acquisition?
- When is an intercreditor agreement required between a 7(a) lender and another secured creditor for an SBA loan?
- Is a first lien position always required on all business assets taken as collateral for an SBA 7(a) loan?
- What documentation is required to perfect a lien on intellectual property, such as a patent or trademark, as collateral?
- When can a second lien position be acceptable for specific assets on a 7(a) loan?
- Is a lender required to take a lien on personal real estate if business assets are sufficient to cover the loan?
- What are the SBA's lien requirements for a 7(a) loan when the collateral includes titled vehicles?
- Are there specific requirements for perfecting a lien on intellectual property as collateral for a 7(a) loan?
- How does the SBA's "all available collateral" rule apply when business assets are limited?
- When is personal real estate typically required as additional collateral for a 7(a) loan?
Criminal history (1)
Debt refinancing (1)
E-Tran & authorization (32)
- What specific data fields in E-Tran are critical for accurate 7(a) loan authorization generation?
- How does a lender request an increase to an authorized 7(a) loan amount after E-Tran approval?
- Under what specific circumstances is a lender permitted to make minor modifications to the 7(a) loan authorization without requesting a formal amendment from SBA?
- What are the specific requirements for a lender to obtain an SBA loan authorization for a 7(a) loan, particularly regarding E-Tran submission?
- What is the correct procedure for a lender to request a material amendment to an already authorized 7(a) loan in E-Tran?
- What is the maximum number of times a lender can request an amendment to a 7(a) loan authorization via E-Tran?
- When is an E-Tran modification required for a final loan amount change less than $5,000?
- What is the process for a lender to obtain an SBA loan authorization for a 7(a) loan?
- What if a loan authorization requires a specific condition precedent to closing that is not met?
- What is the specific impact if the NAICS code entered into E-Tran differs from the primary business activity described in the loan narrative?
- What steps must a lender take in E-Tran if a previously authorized 7(a) loan needs to be cancelled before closing?
- How does a lender ensure the loan covenants in the authorization are accurately reflected in the loan documents?
- When is an E-Tran modification specifically required for changes in collateral post-authorization?
- How does a lender cancel a 7(a) loan authorization in E-Tran before closing?
- What is the process for correcting a minor error in the E-Tran system after 7(a) loan authorization?
- Can a lender modify a 7(a) loan's term or interest rate in E-Tran after initial authorization?
- What E-Tran submission errors most commonly lead to SBA 7(a) guaranty repair or denial?
- How does a lender handle a 7(a) loan authorization amendment request for an increase in project costs post-closing?
- What information must consistently match between SBA Form 1919 and the E-Tran submission to prevent processing delays or issues?
- Which critical loan terms and borrower data must match precisely between the lender's system and E-Tran for 7(a) submissions?
- What are the consequences if a lender submits a 7(a) loan application to E-Tran with missing or incomplete required documentation?
- What are the specific requirements for an E-Tran submission to be considered
- What information must be consistent between SBA Form 1919 and all other loan application documents for E-Tran submission?
- What are the critical data fields in E-Tran that must precisely match SBA Form 1919 for approval?
- How does a lender request an increase to an authorized 7(a) loan amount due to unforeseen project cost increases?
- How does a lender process a 7(a) loan authorization amendment in the E-Tran system after initial approval?
- What is the correct procedure for a lender to amend an E-Tran application after initial submission but before authorization?
- How does a lender correct a material error in E-Tran after the 7(a) loan has already received an SBA authorization?
- How long is an SBA 7(a) loan authorization typically valid from the E-Tran approval date?
- What are the requirements for a lender to obtain an extension of the 90-day E-Tran authorization validity period?
- What documentation is typically required from a lender when submitting a loan to E-Tran for authorization?
- When is an E-Tran modification required for changes to a 7(a) loan's terms after initial authorization?
E-Tran & Authorization (21)
- What are the consequences if the NAICS code entered into E-Tran differs from the primary business activity in the loan narrative?
- How does a lender correct a material error in E-Tran after the 7(a) loan has received an SBA authorization?
- What specific data fields on SBA Form 1919 are critical for consistency with E-Tran for a 7(a) application?
- What documentation is required to amend a 7(a) loan authorization for a change in project costs?
- When must a lender obtain an E-Tran modification for changes to a 7(a) loan's terms?
- What is the primary purpose of the E-Tran system for a 7(a) lender, beyond loan application submission?
- How does a lender process a 7(a) loan authorization amendment in the E-Tran system?
- What are the precise conditions under which a lender must submit an E-Tran modification request versus a new application?
- How does a lender ensure the loan authorization precisely matches final closing documents to avoid guaranty repair?
- What information must match exactly between SBA Form 1919 and E-Tran submission?
- When is an amended SBA loan authorization required after closing?
- What information must precisely match between SBA Form 1919 and the E-Tran submission for a 7(a) loan application?
- When is an E-Tran modification required if the final SBA 7(a) loan amount changes slightly after initial authorization?
- What are the consequences of significant discrepancies between E-Tran submission data and supporting loan documents for a 7(a) loan?
- What is the process for submitting an amended E-Tran request after initial authorization for a 7(a) loan?
- What specific information must a lender submit in E-Tran to request a 7(a) loan increase after authorization?
- How does a lender correct a material error in the E-Tran submission after receiving an authorization?
- What is the consequence if a 7(a) loan is not closed and disbursed within the specified timeframe of its SBA Authorization?
- How does a lender resolve an E-Tran error where the authorized loan amount is incorrect after approval but before disbursement?
- When is an SBA 7(a) loan authorization typically considered fully expired if no extension has been granted?
- What specific data points, beyond the loan amount, are most critical for matching the final executed loan documents to ensure guaranty validity?
Eligibility & Character (2)
Eligibility & size (2)
Eligibility & Size (3)
Eligibility determinations (75)
- Can a trust or an estate be an eligible borrower for an SBA 7(a) loan?
- What constitutes "passive income" disqualifying a business from 7(a) loan eligibility?
- Are businesses that primarily derive revenue from real estate rentals eligible for a 7(a) loan?
- Can a business primarily engaged in lending or investment be eligible for a 7(a) loan?
- What impact does a principal's recent federal tax lien have on 7(a) loan eligibility, even if paid?
- How does the SBA define 'passive business' making it ineligible for a 7(a) loan, and what specific activities might trigger this?
- How does the SBA evaluate the eligibility of a business operating primarily in a regulated industry, such as cannabis or gambling, for a 7(a) loan?
- When is a lender required to conduct a criminal background check for non-owner managers or key employees of an applicant business?
- What specific conditions allow a lender to approve a 7(a) loan for a business that relies heavily on government contracts for revenue?
- How does the lender determine if a prior federal debt delinquency or default (e.g., student loan, tax lien) impacts 7(a) loan eligibility?
- Can a business with an associate that previously defaulted on an SBA loan be eligible for a new 7(a) loan?
- When is a business considered 'speculative' and thus ineligible for an SBA 7(a) loan?
- When is a business primarily engaged in passive activities, such as real estate rentals, considered ineligible for a 7(a) loan?
- What is the importance of a detailed business plan for an SBA 7(a) loan application, especially for new or acquiring businesses?
- What is the maximum aggregate outstanding loan amount for a single 7(a) borrower across all SBA loans?
- Can an SBA 7(a) loan finance the purchase of a business currently in bankruptcy proceedings?
- How does the SBA differentiate between a 'speculative' and an 'eligible' business for a 7(a) loan?
- Can an SBA 7(a) loan be used to acquire a business that operates primarily online without a physical location?
- What types of businesses are generally ineligible for an SBA 7(a) loan?
- Can an SBA 7(a) loan be used to refinance existing business debt without a change of ownership?
- What type of criminal history might automatically disqualify an SBA 7(a) applicant?
- Can an SBA 7(a) loan be used to acquire a business that operates from the applicant's home?
- What if the acquired business has existing debts that the buyer plans to roll into the SBA 7(a) loan?
- Can an SBA 7(a) loan be used to acquire a business that previously used an SBA loan?
- What if a business applicant has outstanding federal tax liens or delinquencies?
- What is the specific impact if an applicant's business operations are primarily located in a foreign country?
- What if an applicant has a prior business failure that resulted in personal losses but not bankruptcy?
- What if an applicant business owner has a recent felony conviction that has been discharged?
- What basic character requirements must business owners meet when applying for an SBA 7(a) loan?
- Can a business primarily generating passive income from non-owner-occupied commercial real estate rentals be 7(a) eligible?
- What constitutes 'credit elsewhere' rendering a business ineligible for an SBA 7(a) loan?
- How does the SBA define a 'speculative business' that is ineligible for 7(a) financing?
- What if a principal has a recent criminal history that is not a felony?
- Can a business engaged in political lobbying be eligible for a 7(a) loan?
- What are the specific requirements for a religious organization's business arm to be 7(a) eligible?
- Can a business owner with delinquent federal debt still be eligible for a 7(a) loan?
- Can a non-profit entity apply for an SBA 7(a) loan for business expansion purposes?
- Is a business primarily generating rental income from commercial property eligible for a 7(a) loan?
- What makes a business 'speculative' and thus ineligible for SBA 7(a) financing?
- What is the maximum percentage of passive income a business can generate to remain 7(a) eligible?
- When can a criminal record or felony conviction render a borrower ineligible for an SBA 7(a) loan?
- What types of 'lending' activities make a business ineligible for an SBA 7(a) loan as a primary purpose?
- How does a lender ensure compliance with the 'use of proceeds' requirements for a 7(a) loan, particularly for working capital?
- How does a lender determine if a small business has exhausted its other financing options before approving a 7(a) loan?
- What if an owner has a history of tax liens, even if they are now paid off, when applying for an SBA 7(a) loan?
- Can an SBA 7(a) loan finance a commercial renovation project costing $300,000 if I buy a business with real estate?
- What specific criteria render a business ineligible for a 7(a) loan, beyond common restrictions like passive income or speculative activities?
- How does an SBA 7(a) loan impact a borrower's ability to obtain other federal government financing?
- What constitutes a 'small business' for 7(a) eligibility beyond revenue or employee count?
- How does a lender determine if a business is eligible if it earns revenue from multiple NAICS codes?
- What if a borrower has outstanding judgments or liens from non-federal entities?
- How does a lender determine if a business is eligible as a for-profit entity for a 7(a) loan?
- What if an owner with exactly 20% equity refuses to provide a personal guaranty, will the SBA 7(a) loan be declined?
- How does the SBA define a 'speculative business' that is ineligible for a 7(a) loan?
- Can a business be eligible for a 7(a) loan if a principal is currently on probation or parole for a felony?
- What if the business for a 7(a) loan requires substantial inventory or equipment incompatible with residential zoning?
- Can an SBA 7(a) loan be used to acquire a business that operates primarily from a mobile location or without a fixed physical address?
- How do SBA 7(a) rules apply to a business that operates as a shared workspace or co-working facility?
- What is the policy for a 7(a) loan when the borrower is a small agricultural cooperative?
- Can a 7(a) loan finance the acquisition of a business whose primary revenue is derived from adult entertainment or gambling activities?
- What if a business seeking a 7(a) loan derives a significant portion of its revenue from selling products on consignment?
- How does an incorrect NAICS code on SBA Form 1919 impact 7(a) loan eligibility for a borrower?
- How does a borrower's prior federal debt delinquency or default (e.g., tax lien) impact their 7(a) loan eligibility?
- How does the SBA define a 'passive business' which is generally ineligible for a 7(a) loan?
- When is a business typically deemed "speculative" and therefore ineligible for SBA 7(a) loan financing?
- Can a business whose primary income is from owning and leasing real estate be eligible for a 7(a) loan?
- What specific types of criminal offenses are generally disqualifying for an SBA 7(a) loan applicant or owner?
- How does the SBA generally treat a 7(a) loan applicant with a prior bankruptcy filing?
- How does a lender determine if a borrower's business is engaged in a "speculative" activity and thus ineligible for a 7(a) loan?
- Can an SBA 7(a) loan be used to purchase a business that is primarily engaged in real estate rental activities?
- What types of businesses are generally ineligible for an SBA 7(a) loan due to being non-profit organizations?
- What is the maximum aggregate principal amount of 7(a) loan financing a single borrower or affiliated group can receive?
- How does the SBA evaluate the eligibility of an applicant business involved in multi-level marketing or pyramid sales schemes?
- Does the SBA consider a business that derives significant revenue from cryptocurrency trading or mining as eligible for a 7(a) loan?
- What is the specific look-back period for criminal history when evaluating an applicant's eligibility for an SBA 7(a) loan?
Eligibility Determinations (23)
- Can an SBA 7(a) loan be used to acquire a business that is primarily an investment or passive real estate holding company?
- Can an existing business with significant negative working capital at closing still be eligible for a 7(a) acquisition loan?
- When is a business whose primary income is derived from renting equipment or real estate eligible under 7(a) rules?
- What documentation confirms a business is 'for-profit' if its mission includes significant social benefits?
- What is the maximum aggregate outstanding loan amount for a single 7(a) borrower?
- How does the 'not engaged in lending' rule apply to a loan applicant?
- Can a non-profit organization receive an SBA 7(a) loan?
- What specific criteria must an entity meet to be considered 'engaged in lending' and thus ineligible for a 7(a) loan?
- Can an SBA 7(a) loan be used to acquire a business that operates from the applicant's home as its primary location?
- How does the SBA define an 'ineligible business' for 7(a) loan purposes regarding passive income?
- What constitutes a 'serious criminal offense' that may cause 7(a) loan ineligibility for a principal?
- Does the SBA allow a business primarily engaged in lending or investments to be eligible for a 7(a) loan?
- What are the specific requirements for a business to be considered "for-profit" under 7(a) rules?
- Can a business engaged primarily in lobbying or political activities be eligible for a 7(a) loan?
- How does the SBA define a "passive business" that is generally ineligible for a 7(a) loan?
- Can a non-profit organization with a for-profit subsidiary be eligible for a 7(a) loan?
- Can a business engaged in multi-level marketing (MLM) be eligible for a 7(a) loan?
- What constitutes an ineligible business for an SBA 7(a) loan based on activity?
- If my previous business failed, resulting in personal losses, will this kill my SBA 7(a) loan chances?
- How do criminal history issues commonly prevent SBA loan approval?
- What if the business I'm acquiring is primarily online with no physical location?
- What types of business entities are generally ineligible for an SBA 7(a) loan?
- Can an SBA 7(a) loan finance the acquisition of a business that is seasonal but also has year-round expenses?
Eligible Use of Proceeds (1)
Environmental (44)
- When is a Phase II Environmental Site Assessment (ESA) required for real estate collateral in a 7(a) loan?
- What specific documentation is required from a lender to prove compliance with environmental due diligence for real estate acquisition for a 7(a) loan?
- What are the specific triggers for a lender to mandate a Phase I Environmental Site Assessment for leased real estate within a 7(a) loan transaction?
- When is an Environmental Questionnaire (SBA Form 1081) sufficient for real estate collateral, without a Phase I ESA?
- When does the SBA require an environmental Phase II Site Assessment for 7(a) loan real estate collateral?
- What specific due diligence is required if a 7(a) loan finances only equipment located in a leased property?
- What are the environmental due diligence requirements for real estate that does not secure the 7(a) loan?
- When a Phase I Environmental Site Assessment (ESA) identifies a Recognized Environmental Condition (REC), what are the lender's subsequent responsibilities?
- When is an Environmental Questionnaire (Form 1081) required for a 7(a) loan that does not involve real estate acquisition?
- What specific environmental due diligence is required for real estate collateral used as a secondary source of repayment?
- If a Phase I ESA recommends a Phase II, what are the lender's options if remediation costs are unknown or prohibitive?
- When is a Phase I Environmental Site Assessment (ESA) always mandatory for a 7(a) loan, regardless of property type or loan amount?
- When is an Environmental Questionnaire (Form 1081) required for a loan?
- What are the lender's responsibilities if a Phase I ESA identifies RECs?
- What triggers the need for an Environmental Questionnaire (SBA Form 1081) for a leasehold improvement loan?
- What if a Phase I ESA identifies a Recognized Environmental Condition (REC) but deems it a 'de minimis' condition?
- When is an Environmental Questionnaire (SBA Form 1081) required for a 7(a) loan without real estate collateral?
- What steps should a lender take if a Phase I ESA identifies a Recognized Environmental Condition (REC)?
- When is an Environmental Questionnaire (Form 1081) required for a 7(a) loan involving real estate?
- What are the lender's responsibilities if a Phase I ESA identifies Recognized Environmental Conditions (RECs)?
- What documentation is required from a lender to prove compliance with environmental due diligence for real estate acquisition for a 7(a) loan?
- When is a Phase II Environmental Site Assessment required for a 7(a) loan, beyond a Phase I?
- What constitutes a 'prudent' environmental due diligence standard for a 7(a) loan involving commercial real estate?
- When is an Environmental Questionnaire (e.g., Form 1081) sufficient for real estate collateral, without requiring a Phase I Environmental Site Assessment (ESA)?
- When is a Phase I Environmental Site Assessment (ESA) required for real estate collateral in a 7(a) loan?
- What specific actions must a lender take when a Phase I ESA reveals Recognized Environmental Conditions (RECs)?
- When is an Environmental Questionnaire (Form 1081) sufficient for real estate collateral, without a Phase I ESA?
- What specific actions must a lender take if they discover undisclosed environmental contamination post-closing?
- When is a Phase I Environmental Site Assessment (ESA) always mandatory for real estate collateral in a 7(a) loan?
- What are a lender's responsibilities if a Phase I ESA identifies Recognized Environmental Conditions (RECs)?
- Under what conditions is a Phase II Environmental Site Assessment required for 7(a) loan collateral?
- What environmental due diligence is required if a 7(a) loan's real estate collateral is adjacent to a known contaminated site?
- What additional environmental due diligence is required for a 7(a) loan if the business handles hazardous materials?
- When does a lender typically require a Phase II Environmental Site Assessment for a 7(a) loan involving real estate?
- If a Phase II Environmental Site Assessment identifies remediation costs, how does a lender treat these for a 7(a) loan?
- If a Phase I Environmental Site Assessment (ESA) identifies Recognized Environmental Conditions (RECs), what are the next steps for a lender?
- What level of environmental due diligence is required for leasehold improvements only, without real estate acquisition?
- When is a lender required to conduct an environmental records search for real estate collateral?
- What are the lender's obligations if environmental contamination is discovered post-closing for 7(a) collateral?
- What are the environmental due diligence requirements for real estate associated with a 7(a) loan?
- What is the lender's responsibility regarding environmental due diligence for non-real estate collateral?
- What environmental due diligence is mandatory for real estate collateral securing a 7(a) loan?
- When is a lender permitted to waive environmental due diligence requirements for real estate collateral?
- When is a lender required to obtain a Phase II Environmental Site Assessment (ESA) for 7(a) loan collateral?
Environmental due diligence (2)
Environmental Due Diligence (2)
Equity injection (1)
Equity Injection (3)
- What documentation is needed to verify cash equity injection from a business's operating account prior to the 7(a) loan closing?
- How does the SBA typically view a borrower's investment of an existing personal vehicle as equity injection for an acquisition?
- Can funds from an investor who will own less than 20% of the business count towards my equity injection?
Equity injection & standby (1)
Equity injection verification (63)
- What documentation verifies funds for equity injection transferred from a personal investment account?
- How does a lender verify equity injection funds that are a cash gift from a non-family third party?
- Can a borrower's investment in a certificate of deposit (CD) count towards the required equity injection?
- What specific documentation is required to verify equity injection funds originating from a borrower's existing business assets, such as equipment or inventory?
- How does a lender verify the source of gifted equity injection funds when the donor is a foreign national?
- How does a lender verify equity injection funds that are sourced from a personal line of credit secured by non-personal real estate?
- What are the specific requirements for a lender to document and verify an equity injection from a retirement account structured as a ROBS (Rollover for Business Startups) transaction?
- How should a lender verify a borrower's equity injection funded by a loan from a non-owner family member?
- Can the value of equipment already owned by the borrower and contributed to the new business count towards the required equity injection?
- How does a lender verify equity injection funds that originate from an overseas bank account?
- What documentation is required to verify equity injection from a personal loan secured by non-pledged investment property?
- How does a lender verify equity injection from the sale of a personal vehicle or boat?
- What documentation is required to verify equity injection from a newly inherited sum of money?
- What documentation is required to verify equity injection from a gift from a non-family member?
- How does a lender verify the liquidity of an equity injection from a borrower's investment account?
- How does a lender verify equity injection from a Self-Directed IRA (SDIRA) structured as a loan to the business?
- What documentation is required to verify equity injection from the sale of a borrower's personal real estate?
- How does a lender verify a gift used for equity injection?
- What is the significance of the "90-day rule" regarding equity injection and prior payments?
- How does the SBA evaluate the value of contributed equipment for equity injection?
- How should a lender verify funds gifted from a non-immediate family member for equity injection?
- How does a lender verify equity injection funds originating from a personal loan secured by the borrower's unencumbered investment property?
- How does a lender verify the value of contributed real estate for equity injection purposes?
- Can a borrower contribute a promissory note from a third party as part of their equity injection?
- What is the process for a lender to verify a cash equity injection that has been held in the borrower's personal savings account for less than 90 days?
- How does a lender verify equity injection from the sale of a cryptocurrency portfolio?
- Can a borrower's sweat equity count towards the required equity injection for a 7(a) loan?
- What documentation is required for equity injection funds transferred from a foreign bank account?
- How does a lender verify equity injection from a personal line of credit that is not fully drawn?
- Can future cash flow or profits from the acquired business count as equity injection?
- What documentation is required for equity injection funds originating from a retirement account rollover?
- Can a personal loan from a non-owner family member count as equity if fully subordinated to the 7(a) loan?
- How should a lender verify cash equity from the borrower's personal savings account for a 7(a) loan?
- How should a lender verify an equity injection sourced from an unsecured personal loan from an unrelated third party?
- Can an equity injection be comprised of unencumbered business assets already owned by the borrower prior to the acquisition?
- How does a lender verify equity injection funds from a borrower's investment account holding illiquid assets?
- How does a lender verify equity injection from a borrower's personal credit card cash advance?
- What are the requirements for verifying a borrower's equity injection when it consists of cash from personal savings accounts?
- What documentation must a lender collect to verify equity injection funds originating from a newly refinanced personal residence?
- Can an unsecured personal loan from a family member be used for my equity injection on an SBA 7(a) acquisition?
- What specific documentation is required to verify a cash equity injection from a buyer's personal funds?
- What specific documentation must a lender obtain to verify a gifted equity injection from a family member?
- How does the SBA verify a non-owner investor's funds used for equity injection if they are not a guarantor?
- What documentation is needed to verify a borrower's equity injection when it comes from an existing business owned by the borrower?
- What documentation is required to verify equity injection funds sourced from a personal stock sale?
- Can an inheritance received after loan application but before closing count as equity injection?
- Can an inheritance received after loan application but before closing count towards equity injection?
- What documentation is required if a business owner contributes pre-existing business equipment as equity?
- How does a lender verify an equity injection from a gift from a non-immediate family member?
- What documentation is required to verify a cash equity injection that originates from a borrower's foreign bank account?
- How does a lender verify existing equity in a business for a recapitalization 7(a) loan?
- How does a lender verify a gift from a non-family member that is intended for the equity injection in a 7(a) loan?
- What documentation is required to verify the source of funds for a borrower's equity injection, especially for personal savings?
- Can a borrower's equity injection funds originate from a loan provided by another business entity they own?
- Can funds from a personal investment account, like a brokerage account, count towards the SBA 7(a) loan equity injection?
- What are the specific requirements for using retirement funds, structured as a rollover, for a 7(a) loan equity injection?
- How does the SBA verify the value of contributed equipment for equity injection in a 7(a) loan?
- Is there a minimum cash portion for the equity injection in an SBA 7(a) business acquisition?
- What documentation is required to verify the cash equity injection from a borrower's foreign bank account?
- What are the specific requirements for verifying a borrower's equity injection when it involves a loan from a non-owner family member?
- Can an equity injection come from a gift provided by a non-affiliated business entity, and how is it verified?
- How does a lender verify the source and control of borrower's equity injection funds from a newly established business bank account?
- What documentation is required to verify the source and sufficiency of equity injection funds from the borrower's personal savings accounts?
Equity Injection Verification (29)
- How does a lender verify equity injection funds originating from a newly established business bank account?
- Can a borrower's investment in leasehold improvements prior to loan closing count towards the equity injection?
- What specific documentation is required to verify the source of gifted equity injection funds from a foreign family member?
- If a borrower contributes equipment as equity, how does the lender verify its fair market value?
- What specific conditions must a personal loan from a non-owner family member meet to count as equity injection for a 7(a) loan?
- How does a lender verify the source of gifted equity injection funds from a foreign national?
- Can a loan from a non-owner family member count as equity injection for a 7(a) loan?
- Can funds from a personal line of credit secured by non-personal real estate be equity injection?
- How does a lender verify equity injection funds sourced from an overseas bank account?
- How does a lender verify equity injection funds from a personal investment account with fluctuating values, like a brokerage account?
- What documentation verifies equity injection funds deposited as cash into a borrower's personal account over several months?
- What documentation is required to verify the source of equity injection funds from a recent personal loan (e.g., HELOC)?
- Can a lender accept contributed equity in the form of existing machinery valued by an internal appraisal?
- What specific documentation is required to verify cash equity injection for a business acquisition?
- How is prior owner debt converted to equity treated for injection purposes?
- How does a lender verify equity injection funds originating from a foreign bank account?
- How does the SBA evaluate the value of contributed equipment for equity injection in a business acquisition?
- What documentation is required to verify equity injection funds originating from a newly refinanced personal residence?
- What specific documentation is required for a lender to verify equity injection from the sale of a personal asset?
- Can a borrower use a cash-out refinance from personal real estate for the equity injection?
- How does a lender verify equity funds from a borrower's existing operating business that is also being acquired?
- Can funds from a retirement account, like a 401k, be used for equity injection if properly withdrawn?
- What specific documentation is required to verify equity from a borrower's personal real estate appraisal?
- Can a loan from a non-owner family member count towards equity injection if on full standby?
- How does a lender verify the source of a borrower's equity injection funds?
- What documentation is required to verify a cash equity injection from a borrower's personal savings?
- What documentation is needed to verify a gift from a family member for a borrower's equity injection?
- Can an existing bank account of the acquired business count towards a borrower's equity injection?
- Is there a minimum cash portion required for the equity injection on an SBA 7(a) business acquisition loan?
Franchise eligibility (29)
- What are the specific criteria for a new franchise model to be included on the SBA Franchise Directory?
- How does a lender determine if a franchise agreement contains impermissible control provisions not listed on the Directory?
- What are the specific requirements for a lender to obtain an approved franchise agreement for a 7(a) loan when the franchise is not listed on the SBA Franchise Directory?
- Which specific provisions in a franchise agreement raise red flags for undue franchisor control, making it ineligible for a 7(a) loan?
- Can an existing franchise location that is not currently listed on the SBA Franchise Directory be eligible for a 7(a) loan?
- How does the SBA determine if a franchise agreement grants the franchisor 'undue control' over the franchisee, impacting 7(a) eligibility?
- Can a franchise system with a foreign-based franchisor be eligible for a 7(a) loan if the business operates in the U.S.?
- What specific due diligence is required for an unlisted franchise agreement lacking SBA formal review?
- What are the requirements for a franchise system to be eligible for SBA 7(a) loans?
- What specific documentation does a lender need to verify an unlisted franchise's eligibility for a 7(a) loan?
- If a franchise agreement is listed on the SBA Franchise Directory but has an addendum or rider, how does a lender assess its eligibility?
- What is the process for submitting a newly established franchise agreement for SBA review and directory listing?
- How does a lender verify a franchise's current listing status on the SBA Franchise Directory?
- What if a proposed franchise agreement includes a clause restricting the borrower's operational control or management?
- How does the SBA determine 'undue control' by a franchisor in a franchise agreement, making it ineligible for 7(a) financing?
- How does the SBA evaluate a franchise agreement not on the directory for acceptable franchisor control provisions?
- What is the specific lender process for submitting an unlisted franchise agreement for SBA review and eligibility determination?
- What specific elements of a franchise agreement does the SBA review to determine eligibility?
- How does the SBA determine the
- What specific circumstances allow a franchisor to be considered affiliated with a franchisee for SBA size purposes?
- What if a franchise system is not listed on the SBA Franchise Directory but the agreement is SBA-compliant?
- How does a lender verify the 'SBA-compliant' status of a franchise agreement not on the directory?
- Can a franchise with a foreign-based franchisor be eligible for a 7(a) loan if the business operates in the U.S.?
- How does the SBA evaluate a master franchise agreement for 7(a) loan eligibility if the borrower is a sub-franchisor?
- What documentation is required from a franchisor for an unlisted franchise to be reviewed for 7(a) eligibility?
- What are the eligibility requirements for a franchise business not listed on the SBA Franchise Directory?
- What constitutes a "material change" to a franchise agreement that necessitates re-review by the SBA for eligibility?
- What are the specific eligibility requirements for a franchise agreement that lacks a formal review or listing on the SBA Franchise Directory?
- What specific types of clauses in a franchise agreement would constitute "undue control" by the franchisor, rendering it ineligible for 7(a) financing?
Franchise Eligibility (14)
- What is the lender's process for submitting an unlisted franchise agreement for SBA eligibility review?
- How does the SBA define 'undue control' by a franchisor that could render a franchise ineligible for 7(a) financing?
- What issues in a franchise agreement typically lead to a determination of 'undue control' by the franchisor?
- What process must a lender follow if a franchise applicant's agreement is not listed on the SBA Franchise Directory?
- What specific provisions in a franchise agreement, if present, would render a franchise ineligible for 7(a) financing?
- How does a lender confirm a franchise is listed on the SBA Franchise Directory?
- What if a franchise agreement is not listed on the SBA Franchise Directory?
- What happens if a franchise is not listed on the SBA Franchise Directory at the time of application?
- What specific due diligence must a lender perform if a franchise system is not listed on the SBA Franchise Directory?
- Are there specific non-financial performance requirements for a franchise to be eligible for SBA 7(a) financing?
- How does the SBA determine if a franchise agreement is 'acceptable' for 7(a) financing if it's not on the Franchise Directory?
- How does a lender determine if a franchise is listed on the SBA Franchise Directory for expedited processing?
- What if a franchise agreement contains provisions for indemnification that concern the SBA?
- Can an SBA 7(a) loan finance a franchise if it's not on the SBA Franchise Directory?
Guaranty fees (35)
- How is the upfront guaranty fee calculated for a 7(a) loan of $500,000 for FY2026?
- What is the process for a lender to remit the SBA upfront guaranty fee after loan closing?
- How does the SBA calculate the 7(a) loan guaranty fee when the loan amount is precisely $1,000,000 for FY2026?
- When is the ongoing SBA servicing fee (annual service fee) for a 7(a) loan typically collected from the lender?
- How do the upfront SBA guaranty fees differ for 7(a) loans between $150,001 and $700,000 for FY2026?
- How do the ongoing annual service fees for 7(a) loans impact the lender's accounting and remittance to SBA?
- What triggers the application of the SBA 7(a) loan prepayment penalty?
- How are guaranty fees structured for a standard 7(a) loan in FY2026?
- How are the ongoing servicing fees (annual service fees) collected by the SBA from lenders for a 7(a) loan, and how are they calculated?
- How are the upfront guaranty fees for a standard 7(a) loan structured for FY2026, especially for loans over $1,000,000?
- How does the lender remit the upfront SBA guaranty fee to the SBA after loan closing?
- What is the ongoing annual service fee for a 7(a) loan, and how is it calculated and remitted by the lender?
- How does the ongoing servicing fee affect the annual percentage rate (APR) calculation for a 7(a) loan?
- When is the annual service fee waived for a 7(a) loan?
- How is the upfront SBA guaranty fee calculated for a 7(a) loan greater than $1,000,000?
- Is the ongoing annual service fee for a 7(a) loan collected directly from the borrower by the SBA?
- How does a lender calculate the ongoing annual service fee payable to the SBA for a 7(a) loan?
- What are the consequences if a lender fails to remit the SBA upfront guaranty fee within the 90-day requirement?
- When is a lender permitted to request a prepayment penalty on a 7(a) loan that is repaid early?
- How does a lender calculate the upfront guaranty fee for an SBA 7(a) loan of exactly $5,000,000 for FY2026?
- How does the SBA calculate the upfront guaranty fee for a standard 7(a) loan for FY2026?
- What are the ongoing servicing fees collected by the SBA from lenders for a 7(a) loan, and how are they funded?
- What specific conditions apply to the prepayment penalty on 7(a) loans exceeding $2,500,000 with terms of 15 years or more?
- How does the SBA calculate the upfront guaranty fee for a 7(a) loan exceeding $1,000,000 for FY2026?
- Is an additional guaranty fee required if a 7(a) loan amount is increased after the initial authorization?
- How does the '90-day rule' affect the calculation of SBA upfront guaranty fees for multiple loans?
- Is an additional SBA guaranty fee charged when a 7(a) loan amount is increased post-authorization?
- Are there specific circumstances under which the upfront SBA 7(a) loan guaranty fee can be waived?
- How is the upfront SBA guaranty fee calculated for a 7(a) loan greater than $1,000,000 for FY2026?
- What is the maximum percentage of an SBA 7(a) loan guaranty?
- How are the ongoing annual service fees for 7(a) loans collected by the SBA from lenders?
- Are there any specific SBA fees charged to lenders for their participation in the 7(a) loan program?
- How do SBA loan guaranty fees for FY2026 apply to loans below $500,000?
- How does the upfront 7(a) guaranty fee calculation differ for loans under $500,000 versus those over $1,000,000 for FY2026?
- For FY2026, what is the specific upfront guaranty fee calculation for a 7(a) loan under $150,000?
Guaranty Fees (16)
- How does a lender ensure compliance with the '90-day rule' for guaranty fee payment for a 7(a) loan?
- When are the annual service fees for 7(a) loans due from lenders to the SBA?
- What is the prepayment penalty calculation for a 7(a) loan with a principal balance exceeding $500,000?
- When is the upfront SBA guaranty fee typically due and how is it calculated for a 7(a) loan?
- Are there any ongoing annual fees that a lender must pay to the SBA for their 7(a) loan portfolio?
- How does a lender calculate the ongoing servicing fee (annual service fee) due to the SBA for a 7(a) loan?
- What is the process for a lender to remit the upfront guaranty fee and annual service fee to the SBA?
- What are the current fiscal year 2026 upfront guaranty fee rates for 7(a) loans?
- How is the ongoing servicing fee calculated and remitted to the SBA?
- How are the upfront guaranty fees for a standard 7(a) loan typically structured for FY2026?
- When is the upfront SBA guaranty fee typically collected from the borrower and remitted by the lender for a 7(a) loan?
- How is the upfront SBA guaranty fee calculated for a 7(a) loan with a principal amount exceeding $1,000,000?
- How does the SBA calculate the annual service fee (on-going guaranty fee) charged to the lender for a 7(a) loan?
- Are there any circumstances where the upfront guaranty fee for a 7(a) loan is waived or reduced for certain loan types?
- What is the upfront guaranty fee percentage for a 7(a) loan over $1,000,000 in FY2026?
- How are prepayment penalties calculated if an SBA 7(a) loan is paid off early?
Guaranty purchase (4)
- What specific documentation is required within the Universal Purchase Package (UPP) to support a lender's liquidation expenses?
- What impact does a lender's failure to obtain a required personal guaranty from a principal have on a 7(a) guaranty purchase request?
- What constitutes a "material default" by a 7(a) lender that would lead to an outright denial of a guaranty purchase request?
- How does a lender ensure all required documentation in a Universal Purchase Package (UPP) is consistent and clearly supports the guaranty purchase request?
Guaranty Purchase (4)
- What specific documentation must a lender include in a Universal Purchase Package (UPP) for a guaranty purchase?
- How does the SBA verify a lender's liquidation expenses submitted with a Universal Purchase Package (UPP)?
- What is the primary purpose of SBA Form 1149 in the guaranty purchase process for a liquidated 7(a) loan?
- What specific documentation is required for a lender to request a guaranty purchase using the Universal Purchase Package (UPP)?
Guaranty Purchase / Repairs & Denials (1)
Guaranty purchase / UPP (28)
- What are the most frequent reasons the SBA denies a 7(a) guaranty purchase request due to lender errors during origination?
- How does a lender properly account for eligible liquidation expenses within the Universal Purchase Package (UPP)?
- What specific documentation is required in the Universal Purchase Package (UPP) to support a request for guaranty purchase when the borrower has defaulted due to fraud?
- How does a lender process a Universal Purchase Package (UPP) when collateral is still being liquidated?
- What specific documentation is required in the Universal Purchase Package (UPP) to support eligible liquidation expenses?
- What is the primary purpose of the Universal Purchase Package (UPP) for lenders?
- What is the importance of the SBA Form 1149 in the guaranty purchase process?
- How does SBA Form 1149 (Lender's Transcript of Account) specifically expedite the processing of a 7(a) guaranty purchase request?
- What specific documentation is required in the Universal Purchase Package (UPP) to support the lender's diligent liquidation efforts?
- How does a lender respond if the SBA requests additional information or clarification during the guaranty purchase review process?
- What happens if a lender submits an incomplete Universal Purchase Package (UPP) to the SBA?
- Can a lender include unapproved legal fees in a Universal Purchase Package (UPP)?
- What key documents are essential for a complete Universal Purchase Package (UPP) submission to the SBA?
- What is the timeframe for a lender to submit a Universal Purchase Package (UPP) after loan default?
- What documentation is required for a lender to request a guaranty purchase using the Universal Purchase Package (UPP)?
- What common errors in loan closing documentation typically lead to a 'denial' of the SBA guaranty purchase request?
- How does using SBA Form 1149 specifically expedite the processing of a 7(a) guaranty purchase request?
- What are the key elements a lender must include in a Universal Purchase Package (UPP) submission for guaranty purchase?
- How must a lender document all post-closing servicing actions to ensure a successful 7(a) guaranty purchase?
- What specific documentation must a lender include in the Universal Purchase Package (UPP) to justify liquidation expenses?
- What impact does a lender's failure to obtain a required personal guaranty have on a guaranty purchase request?
- How does SBA Form 1149 expedite the processing of a 7(a) guaranty purchase request?
- What is the typical timeframe for a lender to submit a Universal Purchase Package (UPP) after loan default?
- How does the SBA respond to a guaranty purchase request if the lender failed to properly secure required collateral?
- What is the impact on the SBA guaranty if a lender failed to obtain a required personal guaranty from a principal?
- What is the primary purpose of the "Request to Honor SBA 7(a) Loan Guaranty" form in the UPP?
- What is the primary purpose of the SBA Form 1149 (Lender's Transcript of Account) in the guaranty purchase process?
- What documentation must a lender provide to the SBA to support a request for a guaranty purchase due to borrower default?
Guaranty Purchase / UPP (12)
- How should a lender document eligible liquidation expenses within the UPP for a 7(a) guaranty purchase?
- What critical information often missing from a Universal Purchase Package (UPP) leads to an SBA request for more information?
- How does a lender handle an SBA decision to repair a guaranty due to a minor documentation error during UPP review?
- What is the primary purpose of the Universal Purchase Package (UPP)?
- What is the key impact of a 'repair' on an SBA guaranty purchase request?
- How does a lender request an SBA guaranty purchase after loan default?
- What is the required timeframe for a lender to submit a Universal Purchase Package (UPP) to the SBA after a 7(a) loan default?
- What is the purpose of SBA Form 1149 (Lender's Transcript of Account) in a 7(a) guaranty purchase request?
- What are common reasons for the SBA to deny a guaranty purchase request from a lender?
- How does the SBA typically calculate the amount of guaranty honored if a repair is applied due to lender error?
- What are the consequences if a lender fails to submit the Universal Purchase Package (UPP) within the required timeframe?
- What documentation is required to request a guaranty purchase using the Universal Purchase Package (UPP)?
Guaranty repair / denial (1)
Guaranty requirements (1)
Guaranty Requirements (1)
Lender participation requirements (1)
Life insurance (24)
- When can a lender require a collateral assignment of life insurance for a 7(a) loan on a non-owner key employee?
- What documentation is required for a lender to properly assign a life insurance policy as collateral for a 7(a) loan?
- What specific details must a lender verify when structuring life insurance collateral assignments for multiple key principals with varying ownership stakes?
- When is a collateral assignment of life insurance on a key principal mandatory for an SBA 7(a) loan?
- Under what circumstances can a lender waive the life insurance requirement for a 7(a) loan on a key principal?
- What are the specific requirements for life insurance collateral assignment when multiple key principals exist?
- When is life insurance required on key principals for an SBA 7(a) loan?
- When is collateral assignment of life insurance required for principals on an SBA 7(a) loan?
- Can a term life insurance policy be used for the collateral assignment requirement on an SBA 7(a) loan?
- If a borrower has existing life insurance, can it be assigned to the lender to satisfy the 7(a) loan requirement?
- What specific steps must a lender take to properly assign life insurance as collateral?
- When is life insurance on key principals absolutely required for an SBA 7(a) loan?
- How should a lender handle life insurance assignments if there are multiple key principals on a 7(a) loan?
- How does a lender ensure life insurance policies assigned as collateral are properly maintained throughout the loan term?
- How should a lender structure the assignment of life insurance on key principals for a 7(a) loan as collateral?
- Can a term life insurance policy be used for the required collateral assignment on key principals for a 7(a) loan?
- What is the requirement for a lender to ensure proper maintenance of life insurance collateral on key principals?
- Under what specific circumstances can a lender waive the requirement for life insurance on a key principal for a 7(a) loan?
- What are a lender's options if a required key principal for a 7(a) loan is deemed uninsurable for life insurance?
- Are there specific requirements for a lender to obtain and maintain a security interest in life insurance policies used as collateral?
- Can a lender rely on a universal life insurance policy that has a cash value for a collateral assignment on a 7(a) loan?
- What are the requirements for assigning life insurance as collateral on a 7(a) loan?
- If life insurance is required, can an existing policy be assigned to the lender, and what are the requirements?
- Can the borrower's business entity be named as the beneficiary for SBA-mandated life insurance, instead of the lender?
Life Insurance (13)
- How does a lender ensure proper collateral assignment of life insurance on multiple key principals?
- How does a lender ensure sufficient life insurance coverage for multiple key principals with varying ownership stakes?
- Under what specific circumstances can a lender waive the life insurance requirement for a key principal on a 7(a) loan?
- How should a lender structure the beneficiary and assignment of life insurance on a key principal for a 7(a) loan?
- When is life insurance required as collateral for key principals with less than 20% ownership in a 7(a) loan?
- What are the specific requirements for naming the lender as the loss payee on a life insurance policy collateral assignment?
- When is life insurance on key principals a mandatory loan condition?
- Who must be named as the beneficiary for life insurance on a 7(a) loan?
- What is the requirement for life insurance on key principals for an SBA 7(a) loan, and how should it be structured?
- Can a borrower's existing personal life insurance policy be used to satisfy the SBA's life insurance requirement for a 7(a) loan?
- Is a decreasing term life insurance policy acceptable for the SBA's life insurance requirement on a 7(a) loan?
- When is life insurance on key principals required by the SBA, and who must be the beneficiary?
- When is a lender *not* required to obtain life insurance on a key principal for a 7(a) loan?
Liquidation (35)
- What constitutes diligent liquidation efforts a lender must demonstrate before submitting a guaranty purchase request?
- What specific documentation must a lender include in a liquidation plan submitted to the SBA?
- What are the SBA's expectations for a lender's collateral valuation during the liquidation process of a defaulted 7(a) loan?
- How does a lender assess 'prudent liquidation' for a 7(a) loan to protect the SBA guaranty?
- What minimum collection efforts must a lender demonstrate before submitting a 7(a) liquidation plan?
- What is the specific lender process for obtaining SBA approval for a debt compromise offer from a borrower in liquidation?
- What is the specific lender's responsibility regarding environmental due diligence during the liquidation of real estate collateral?
- What are a lender's primary responsibilities once a 7(a) loan enters liquidation after default?
- What is the role of a "workout plan" in the liquidation of a defaulted 7(a) loan?
- What is the specific timeframe for a lender to notify the SBA after a 7(a) loan defaults and liquidation actions begin?
- How does a lender comply with SBA requirements for maximizing recovery on collateral during liquidation?
- What are the initial steps a lender must take upon a default on an SBA 7(a) loan before initiating liquidation?
- What minimum efforts must a lender demonstrate in collection and recovery before submitting a liquidation plan to the SBA?
- What is the required timeframe for a lender to submit a liquidation plan?
- What is the process for a lender to obtain SBA approval for extraordinary liquidation expenses?
- What constitutes 'prudent liquidation' for a 7(a) loan to protect the SBA guaranty during default?
- What is the SBA's expectation for a lender's 'workout plan' for a defaulted 7(a) loan prior to liquidation?
- What specific steps must a lender take to mitigate loss during loan liquidation before submitting a Universal Purchase Package (UPP)?
- What specific steps must a lender take to commence liquidation actions after a 7(a) loan default?
- What constitutes "commercially reasonable" efforts by a lender in liquidating collateral for a defaulted 7(a) loan?
- What documentation is critical for a lender to submit with a liquidation plan for a defaulted 7(a) loan?
- What is the maximum timeframe for a lender to submit a liquidation plan for a defaulted 7(a) loan?
- Under what conditions can a lender charge off a 7(a) loan without prior SBA approval during the liquidation process?
- What is the process for a 7(a) lender to obtain SBA approval for a debt compromise offer with a borrower in liquidation?
- What specific documentation is required for a lender to prove 'commercially reasonable' disposition of collateral during 7(a) loan liquidation?
- What steps must a lender take when a personal guarantor fails to perform on their guaranty during 7(a) loan liquidation?
- What are a lender's primary responsibilities immediately after a 7(a) loan enters liquidation after default?
- What steps must a lender take to mitigate loss during loan liquidation before submitting a Universal Purchase Package (UPP)?
- What is the specific timeframe for a lender to notify the SBA of a 7(a) loan default?
- What specific steps must a lender take to secure collateral immediately upon a 7(a) loan default?
- What is the required timeframe for a lender to submit a liquidation plan for a defaulted 7(a) loan?
- What documentation is required from a lender to justify liquidation expenses in a Universal Purchase Package (UPP)?
- Can a lender accept a "soft offer" for collateral in liquidation, or is a formal appraisal always required for disposition?
- What are the critical elements a lender must include in the initial liquidation plan submitted to the SBA?
- When a lender is liquidating collateral for a 7(a) loan, what are the specific requirements for proving "commercially reasonable" disposition?
Liquidation / Repairs & denials (1)
Loan terms (4)
- What is the maximum loan term for a 7(a) loan primarily for equipment with no real estate?
- What is the maximum loan term for an SBA 7(a) loan used solely to acquire real estate?
- What is the typical repayment term for an SBA 7(a) loan that finances only a business acquisition and no real estate?
- What is the maximum allowable loan term for a 7(a) loan used solely for working capital?
Loan uses & terms (1)
Management experience (1)
Personal guarantees (1)
Personal guarantees & affiliation (2)
Personal Guaranties (1)
Personal guaranty (1)
Prudent lending (3)
- What specific financial metrics and qualitative factors are evaluated under "prudent lending standards" for 7(a) loan approval?
- What are the specific requirements for a lender to demonstrate adherence to
- What are a lender's responsibilities concerning the proper use of 7(a) loan proceeds by the borrower?
Prudent lending standards (29)
- How does a lender assess the impact of a significant decline in the borrower's industry on 7(a) loan repayment ability?
- What specific documentation is required from a lender to demonstrate 'prudent lending standards' in evaluating a borrower's industry experience for a 7(a) loan?
- How does the SBA's 'prudent lending standards' apply to the evaluation of working capital projections for a new business acquisition?
- What constitutes a failure to adhere to 'prudent lending standards' in a 7(a) loan acquisition, leading to a guaranty repair?
- What specific factors should a lender assess when underwriting a business with a high customer concentration?
- How does a lender ensure compliance with 'prudent lending standards' when underwriting a startup 7(a) loan?
- How does the SBA assess "prudent lending standards" in 7(a) loan underwriting?
- How does the SBA evaluate "prudent lending standards" in 7(a) loan underwriting regarding collateral analysis?
- How does a lender apply 'prudent lending standards' when evaluating a borrower's historical financial performance trends for a 7(a) loan?
- What specific elements of a borrower's business plan must a lender critically evaluate to meet prudent lending standards for a startup?
- When underwriting a 7(a) loan, how does a lender ensure that personal resources of the principals are properly considered in the global cash flow analysis?
- What common indicators in a business's financial projections would signal a failure to meet prudent lending standards?
- What specific documentation is required for a lender's independent credit analysis under prudent lending standards?
- How does inadequate collateral coverage affect a lender's adherence to prudent lending standards?
- What documentation demonstrates a lender's adherence to prudent lending standards during an SBA audit?
- How does the SBA evaluate 'prudent lending standards' in 7(a) loan underwriting regarding debt service coverage?
- How should a lender document the 'prudent lending standards' applied when approving a 7(a) loan for a new business start-up?
- What specific factors would prompt the SBA to review a lender's 'prudent lending standards' during an oversight visit?
- What specific financial metrics are evaluated under 'prudent lending standards' for 7(a) loan approval?
- How does a lender determine if a small business has 'exhausted other financing options' per prudent lending?
- How does a lender evaluate the reasonableness of a borrower's projections for future revenue and cash flow?
- What specific actions or omissions by a lender may demonstrate a failure to adhere to 'prudent lending standards' during underwriting?
- What specific requirements apply to the "prudent lending standards" for a lender's credit analysis in a 7(a) loan?
- What constitutes a "material adverse change" in a borrower's financial condition that requires lender action prior to closing?
- What specific information should a lender include in the credit memo for a 7(a) loan application?
- How does the SBA evaluate the reasonableness of a borrower's projections for future revenue and cash flow?
- What is the role of the lender's credit committee in the SBA 7(a) loan approval process?
- What are the consequences for a lender if the SBA determines they failed to adhere to prudent lending standards for collateral?
- How does the SBA determine if a lender has met the "prudent lending standards" requirement during loan origination?
Prudent Lending Standards (16)
- What constitutes 'prudent lending standards' regarding a borrower's industry experience for a 7(a) loan?
- What specific conditions allow a lender to approve a 7(a) loan for a business relying heavily on government contracts?
- How does a lender document adherence to prudent lending standards in the underwriting credit memo?
- How does the credit memo for a 7(a) loan demonstrate adherence to prudent lending standards?
- How does the SBA assess a lender's adherence to "prudent lending standards" during 7(a) loan reviews?
- In what specific areas does the SBA typically scrutinize a lender's "prudent lending standards" during an oversight review?
- How should a lender document its assessment of the borrower's personal financial strength, beyond a credit score, for a 7(a) loan?
- What specific due diligence must a lender perform to evaluate the borrower's proposed management team's experience for a startup?
- What constitutes prudent lending standards for SBA 7(a) underwriting?
- How does the SBA define 'prudent lending standards' in the context of 7(a) loan underwriting?
- What constitutes prudent lending standards for SBA 7(a) underwriting regarding credit analysis?
- How does a lender evaluate the reasonableness of a borrower's cash flow projections for a 7(a) loan approval?
- What ongoing monitoring activities are part of a lender's prudent lending standards for an SBA 7(a) loan after closing?
- How does the SBA define 'prudent lending standards' for collateral requirements beyond the minimum blanket lien?
- What constitutes a failure of 'prudent lending standards' regarding financial projections for a 7(a) loan?
- What does 'prudent lending standards' mean in the context of SBA 7(a) loans?
Repairs & denials (28)
- When does a lender's failure to properly monitor collateral value during servicing result in a 7(a) guaranty repair?
- What specific underwriting failures or omissions by a lender are categorized as 'material non-compliance' by the SBA, risking 7(a) guaranty repair or denial?
- What constitutes 'material non-compliance' with SBA lending policies that typically leads to a guaranty repair or denial?
- Can an SBA 7(a) loan be repaired if the lender failed to ensure the borrower properly used all loan proceeds as authorized?
- What specific actions by a lender during loan origination would typically lead to a guaranty denial?
- What constitutes a "repair" to the SBA guaranty during a purchase request?
- What specific actions by a lender during loan origination would typically lead to an outright denial of the SBA 7(a) guaranty, rather than a repair?
- What are common eligibility failures during origination that lead to an outright denial of the SBA guaranty?
- Can a lender appeal an SBA decision to repair or deny a guaranty purchase request?
- What specific actions or omissions by a lender in liquidation can lead to a guaranty repair?
- What if a lender's internal loan review discovers a potential eligibility issue post-closing?
- What common underwriting errors typically lead to an SBA 7(a) loan guaranty repair?
- If an eligibility issue is discovered post-closing, what is the impact on the SBA guaranty?
- What common underwriting errors typically lead to an SBA 7(a) loan guaranty repair during a purchase request?
- What is the key impact of a 'repair' on an SBA guaranty purchase request for a defaulted loan?
- What specific actions can a lender take to mitigate a potential 'repair' when a 7(a) loan defaults due to inadequate collateral?
- What constitutes a "material change" to the business or loan terms that requires prior SBA approval to avoid a guaranty repair?
- What are common causes for a "repair" to the SBA guaranty rather than a full denial of the purchase request?
- What is the impact of an unapproved material servicing action on the SBA's 7(a) loan guaranty?
- What constitutes a 'failure to adhere to prudent lending standards' that could lead to a guaranty repair?
- How does an unapproved material servicing action impact the SBA's 7(a) loan guaranty?
- What is the impact on the SBA guaranty if a lender discovers an eligibility issue post-closing that would have prevented approval?
- What constitutes 'material non-compliance' by a lender during underwriting or closing that could result in a repair to the 7(a) guaranty?
- What are the common reasons for the SBA to deny a 7(a) loan application during its review, beyond eligibility issues?
- If the SBA issues a denial of the 7(a) guaranty, what recourse or action can the lender take?
- What is the process for a lender to appeal an SBA decision to repair or deny a 7(a) loan guaranty?
- What is the specific timeline for a lender to submit a response to an SBA initial notification of guaranty repair or denial?
- What constitutes a "material misrepresentation" by a borrower that could lead to an outright 7(a) guaranty denial?
Repairs & Denials (9)
- What specific lender errors typically result in a 'repair' of the 7(a) guaranty during liquidation?
- What common lender errors typically result in a "repair" of the SBA 7(a) loan guaranty during liquidation?
- What constitutes a "material misrepresentation" by a borrower that could lead to a 7(a) guaranty denial?
- What specific lender actions or omissions during underwriting are most likely to result in a 'repair' of the SBA guaranty?
- How does a lender prevent a guaranty denial related to undisclosed affiliations identified post-closing?
- What specific examples of failing 'prudent lending standards' by a lender can lead to a repair or denial of a 7(a) guaranty?
- How does inadequate collateral documentation by a lender lead to a repair or denial of the SBA 7(a) guaranty?
- What specific lender actions or omissions can lead to a repair of the SBA guaranty, short of a full denial?
- Can a lender cure an eligibility defect discovered post-closing to avoid a guaranty repair or denial?
Required forms (21)
- Which additional SBA forms are universally required for all 7(a) loan applications, beyond the borrower information form?
- What specific certifications on SBA Form 1919 are critical for an applicant's eligibility, and how does a lender verify them?
- Is SBA Form 1920 (Lender's Application for Guaranty) still required for 7(a) loan submissions?
- What is the primary purpose of SBA Form 1919 for eligibility?
- Beyond Form 1919, which other SBA forms are strictly mandatory for all 7(a) loan applications, regardless of loan size?
- Which specific eligibility certifications are collected on SBA Form 1919 that are crucial for a 7(a) loan application and must be verified by the lender?
- What are the consequences if SBA Form 1919 contains material omissions or misrepresentations?
- What specific mandatory SBA forms are uniformly required for all 7(a) loan applications?
- Beyond Form 1919, which other mandatory SBA forms are essential for every 7(a) loan application?
- What information on SBA Form 1919 must be consistent with the lender's internal credit memo and E-Tran?
- What information from SBA Form 1919 must precisely match E-Tran for a successful 7(a) loan authorization request?
- When is an SBA Form 912 (Statement of Personal History) specifically required for a non-owner guarantor?
- What eligibility certifications are collected on SBA Form 1919 that are crucial for a 7(a) loan application?
- What specific lender certifications are required on the Lender's Application for Guaranty (SBA Form 1920, or its current equivalent in E-Tran)?
- What is the importance of a lender's detailed credit memorandum in the 7(a) loan approval process?
- Beyond Form 1919, what other mandatory SBA forms are always required for every 7(a) loan application package?
- What is the specific purpose of SBA Form 912 and who must complete it for eligibility?
- When is a personal financial statement (SBA Form 413) required for non-owner guarantors of a 7(a) loan?
- Are all owners of an applicant business required to sign SBA Form 1919?
- When is SBA Form 912, Statement of Personal History, specifically required for 7(a) loan applicants?
- How does a lender evaluate inconsistencies between an applicant's SBA Form 1919 and other application documents?
Required Forms (15)
- Which individuals must complete SBA Form 413 and how does it inform credit decisions?
- How does SBA Form 1919 ensure borrower eligibility compliance for a 7(a) loan?
- What is the primary purpose of SBA Form 1919 and how does a lender use it in 7(a) underwriting?
- What is the significance of the "Statement of Personal History" section on SBA Form 1919 for eligibility?
- Which SBA forms are mandatory for every 7(a) loan application?
- What is the purpose of collecting borrower certifications on SBA Form 1919?
- What is the importance of the SBA Form 1919 (Borrower Information Form) in the 7(a) loan application process?
- What is the relationship between SBA Form 1919 and 1920, and which is currently required for 7(a) loan applications?
- What specific information on SBA Form 1919 must be consistent with the lender's internal credit memo and E-Tran submission?
- What if an owner provides incomplete or inconsistent information on SBA Form 1919 during the 7(a) loan application?
- Are there specific requirements for the lender to verify information provided on SBA Form 1919?
- When must an applicant update their SBA Form 1919, Borrower Information Form, during underwriting?
- Does the lender need to collect separate consent forms for background checks from non-owner spouses?
- What specific certifications on SBA Form 1920 (or E-Tran equivalent) relate to credit elsewhere?
- What information must match between SBA Form 1919 and the E-Tran submission for a 7(a) loan?
Required forms (1919, etc.) (8)
- What specific fields in SBA Form 1919 are most critical for initial eligibility review, and what common errors lead to delays?
- What specific certifications about criminal history are required from principals on SBA Form 1919 for 7(a) loan eligibility?
- What is the lender's responsibility for validating the business purpose and use of proceeds certified on SBA Form 1919?
- What is the consequence for a lender if there are inconsistencies between the borrower's SBA Form 1919 and other application documents?
- Which specific lender certifications are required on the Lender's Application for Guaranty (or its E-Tran equivalent) to ensure loan eligibility?
- What is the purpose of SBA Form 413, and which individuals must complete it for a 7(a) loan application?
- What is the purpose of SBA Form 413, and which individuals must complete it for a 7(a) loan?
- What is the primary purpose of SBA Form 912, and who is required to complete it for a 7(a) loan?
Required Forms (1919, etc.) (2)
Required forms (1919) (1)
Required forms (912) (1)
SBSS sunset (17)
- What operational adjustments must a lender make to its internal credit scoring and underwriting processes for 7(a) Small Loans following the SBSS score sunset?
- How does the sunset of the SBSS score requirement impact a lender's credit analysis for 7(a) Small Loans?
- What specific documentation and credit analysis are required for SBA Express loans after the sunset of the SBSS score requirement?
- For 7(a) Small Loans after the SBSS sunset, what alternative credit analysis does the SBA expect from lenders?
- What alternative credit analysis methods are acceptable for 7(a) Small Loans following the SBSS sunset?
- How does the sunset of SBSS impact credit analysis for 7(a) Small Loans not using E-Tran?
- What alternative credit scoring methods are now recommended for 7(a) Small Loans after the SBSS sunset?
- What is the status of the SBSS score requirement for 7(a) Small Loans after its sunset?
- How does the 'sunset of SBSS score' requirement impact a lender's credit analysis for 7(a) Small Loans?
- What are the key implications for a lender's credit analysis of 7(a) Small Loans following the SBSS score sunset?
- For 7(a) Small Loans, what credit documentation now replaces the reliance on the SBSS score for underwriting?
- What are the SBA's current policy expectations for documentation of a lender's independent credit analysis for 7(a) Small Loans?
- What documentation and credit analysis are required for SBA Express loans after the sunset of the SBSS score requirement?
- What specific documentation is now required in the loan file for 7(a) Small Loans following the sunset of the SBSS score?
- How does the "sunset of SBSS score" requirement affect underwriting for 7(a) Small Loans?
- With the sunset of SBSS, what alternative credit scoring methodologies are acceptable for underwriting 7(a) Small Loans ($500,000 or less)?
- How has the sunset of the SBSS score requirement specifically impacted underwriting for 7(a) Small Loans ($500,000 or less)?
SBSS Sunset (10)
- Beyond SBSS, what specific credit analysis must a lender perform for 7(a) Small Loans?
- How has the sunset of the SBSS score requirement impacted underwriting for 7(a) Small Loans?
- Does the sunset of the SBSS score impact the requirement for a credit memo or documented credit analysis for 7(a) Small Loans?
- For 7(a) Small Loans, what specific alternative credit analysis methodologies are now required in place of the SBSS score?
- Does the sunset of SBSS affect the underwriting requirements for standard 7(a) loans above the Small Loan threshold?
- How does the sunset of the SBSS score impact 7(a) Small Loan underwriting?
- How does the sunset of the SBSS score requirement impact underwriting for 7(a) Small Loans?
- How must lenders underwrite 7(a) Small Loans following the sunset of the SBSS score requirement?
- With the sunset of the SBSS score, what alternative credit scoring methods are acceptable for small 7(a) loans?
- What is the status of the SBSS score requirement for 7(a) Small Loans?
Secondary market (21)
- What are the specific reporting requirements for lenders after selling the guaranteed portion of a 7(a) loan on the secondary market?
- What specific ongoing reporting obligations does a 7(a) lender have to the SBA after securitizing and selling the guaranteed portion of a loan on the secondary market?
- What are a lender's ongoing servicing obligations after selling the guaranteed portion of a 7(a) loan on the secondary market?
- What are the requirements for assigning secondary market loans through SBA Form 1088?
- What are the key requirements for a lender to sell the guaranteed portion of a 7(a) loan on the secondary market?
- What specific actions must a lender take if a secondary market investor defaults on purchasing the guaranteed portion of a 7(a) loan?
- What specific representations and warranties must a lender make when selling the guaranteed portion of a 7(a) loan?
- What specific lender reporting requirements apply to the sale of the guaranteed portion on the secondary market?
- What specific ongoing reporting obligations does a 7(a) lender have after selling the guaranteed portion of a loan on the secondary market?
- What specific reporting obligations does a lender have to the SBA after selling the guaranteed portion of a 7(a) loan?
- What are the ongoing servicing obligations a 7(a) lender retains after selling the guaranteed portion of a loan on the secondary market?
- What are the lender's responsibilities after selling the guaranteed portion of a 7(a) loan on the secondary market?
- What are the primary benefits for a lender to sell the guaranteed portion of a 7(a) loan on the secondary market?
- How does the SBA typically review a lender's loan file in the context of a secondary market audit?
- What specific reporting requirements apply to a 7(a) lender after selling the guaranteed portion of a loan?
- What ongoing servicing obligations does a 7(a) lender retain after selling the guaranteed portion of a loan on the secondary market?
- What are the SBA's reporting requirements for 7(a) lenders regarding sales of guaranteed loan portions on the secondary market?
- How often does the SBA require lenders to report on 7(a) loan portfolio performance for secondary market purposes?
- How does a lender ensure timely and accurate reporting of 7(a) loan sales on the secondary market to the SBA?
- What are the common triggers that lead to an SBA programmatic or secondary market review of a lender's 7(a) loan portfolio?
- Post-secondary market sale, what are the lender's continuing obligations regarding servicing, reporting, and liquidation of the unguaranteed portion of a 7(a) loan?
Secondary Market (11)
- What are the rules for a 7(a) lender to sell the guaranteed portion of a loan on the secondary market?
- What is a lender's ongoing responsibility for servicing a 7(a) loan after selling the guaranteed portion on the secondary market?
- What documentation must a lender provide to the FTA when selling the guaranteed portion of a 7(a) loan on the secondary market?
- What are the consequences for a lender if a previously sold guaranteed portion of a loan defaults due to lender error?
- What are the lender requirements for pooling and selling the guaranteed portion?
- What are the requirements for pooling and selling the guaranteed portion of a 7(a) loan on the secondary market?
- What are a 7(a) lender's ongoing reporting obligations after selling the guaranteed portion of a loan on the secondary market?
- How does the SBA process the guaranty payment to the secondary market investor (Purchaser) for a 7(a) loan?
- What specific documentation is required for a lender to sell the guaranteed portion of a 7(a) loan on the secondary market?
- What are the risks for a lender holding the unguaranteed portion of an SBA 7(a) loan?
- What are the lender requirements for pooling and selling the guaranteed portion of a 7(a) loan?
Servicing & liquidation (1)
Servicing actions (9)
- When can a lender release collateral on a 7(a) loan without obtaining prior SBA approval?
- What steps must a lender take if a 7(a) loan becomes delinquent due to the borrower's federal tax liens?
- When must a lender seek SBA approval for a change in business ownership after a 7(a) loan has closed?
- How does a lender assess the impact of a significant post-closing event on the borrower's ability to repay a 7(a) loan?
- Which specific servicing actions for a 7(a) loan can a lender take without prior SBA approval?
- What defines a "material change" to collateral that requires prior SBA approval for a 7(a) loan?
- What are the specific requirements for a lender to approve a change in the legal entity structure of a 7(a) borrower post-closing?
- Which material servicing actions can a 7(a) lender take without prior SBA approval?
- Can a lender approve a change in a borrower's business legal entity structure without prior SBA approval?
Servicing Actions (7)
- What collateral servicing actions require prior SBA approval versus those delegated to the lender?
- Which specific servicing actions on a fully disbursed 7(a) loan can a lender undertake without prior SBA approval?
- When can a lender approve a change in ownership for a 7(a) borrower without prior SBA approval?
- When can a 7(a) lender approve a borrower's request for a loan deferment period without prior SBA approval?
- When can a lender approve a deferment period without prior SBA approval for a 7(a) loan?
- What servicing actions can a 7(a) lender take without prior SBA approval?
- Can a lender approve a material change to collateral without prior SBA approval?
Servicing actions requiring SBA approval (1)
Servicing actions without SBA approval (33)
- What are the specific conditions under which a lender can approve a business name change for a 7(a) borrower without prior SBA approval?
- Can a lender approve a change in a 7(a) borrower's legal entity structure without prior SBA approval?
- What is the process for a lender to request a full release of personal guaranty from a principal for an SBA 7(a) loan post-closing?
- What are the specific requirements for a lender to release its lien on collateral for a 7(a) loan during servicing without prior SBA approval?
- What specific conditions and documentation are required for a lender to approve a change in the borrower's legal entity structure without prior SBA approval?
- Can a 7(a) lender approve a deferment of principal and interest payments without prior SBA approval?
- Can a 7(a) lender approve a change in a borrower's business legal entity structure without prior SBA approval?
- What actions can a lender take without prior SBA approval during the servicing of a 7(a) loan?
- Which servicing actions can a 7(a) lender take without prior SBA approval?
- Can a lender approve a deferment period for an SBA 7(a) loan without prior SBA approval?
- When can a lender request prior approval from the SBA for a significant servicing action?
- When can a lender approve a change in the legal entity structure of a 7(a) borrower without prior SBA approval?
- What are the specific requirements for a lender to release a blanket lien on non-essential business assets during the loan term?
- Under what specific circumstances can a lender approve an interest-only payment period for a 7(a) loan without prior SBA approval?
- What specific types of collateral substitutions can a lender approve without prior SBA consent on a 7(a) loan?
- Can a lender release a personal guarantor without SBA approval if collateral fully covers the loan?
- What specific types of collateral releases can a lender execute without prior SBA approval?
- Can a lender extend the payment deferment period on a 7(a) loan without prior SBA approval?
- Which specific collateral modifications can a lender approve without seeking prior SBA consent?
- Which specific servicing actions can a 7(a) lender take without prior SBA approval?
- What information must a lender provide to the SBA when requesting prior approval for a significant servicing action?
- When can a 7(a) lender release a portion of the collateral without prior SBA approval if the remaining collateral is sufficient?
- Can a 7(a) lender release a portion of the collateral without prior SBA approval if the remaining collateral is sufficient?
- Can a 7(a) lender approve a change in a borrower's business location without prior SBA approval?
- What constitutes a 'material change' to collateral that requires prior SBA approval for a 7(a) loan servicing action?
- What steps should a lender take if a borrower with a 7(a) loan requests an extension of the loan maturity date?
- When can a lender approve a deferment period for a 7(a) loan without prior SBA approval?
- When can a lender approve a business name change without prior SBA approval for a 7(a) loan?
- Can a 7(a) lender approve a change in ownership percentage among existing owners without prior SBA approval?
- What are the SBA's requirements for a lender to release a personal guarantor from a 7(a) loan?
- Which specific types of collateral can a lender release without prior SBA approval during the servicing phase of a 7(a) loan?
- What are the key considerations for a lender when approving a material change in the borrower's business entity structure (e.g., sole proprietorship to LLC) during servicing?
- What constitutes a "material change" to a 7(a) loan that requires prior SBA approval during servicing?
Servicing Actions without SBA Approval (2)
Servicing Actions Without SBA Approval (11)
- When can a lender approve a short-term deferment or modification of a 7(a) loan's payment terms without prior SBA consent?
- Under what specific circumstances can a lender change the frequency of payments (e.g., from monthly to quarterly) without SBA approval?
- Can a lender approve a deferment period without prior SBA approval?
- What servicing actions require prior written SBA approval?
- Can a 7(a) lender approve the substitution of significant collateral without prior SBA approval?
- Can a 7(a) lender approve a change in the borrower's legal business name without prior SBA approval?
- Can a lender approve a deferment of payments for a 7(a) loan without prior SBA approval?
- Under what conditions can a lender approve a change in collateral without prior SBA approval for a 7(a) loan?
- Can a lender approve a business name change without prior SBA approval for a 7(a) loan?
- Can a lender approve a collateral substitution without prior SBA approval during 7(a) loan servicing?
- When can a lender approve a change in the business name or legal structure without prior SBA approval?
Servicing actions without SBA approval / Repairs & denials (1)
Standby agreements (34)
- What documentation must a lender obtain to ensure a seller note is fully on standby and subordinated to the SBA 7(a) loan?
- What specific financial covenants or conditions must be included in a seller note on full standby for a 7(a) acquisition loan?
- What specific language must a standby agreement for a seller note include to meet SBA 7(a) requirements for equity injection?
- What is the impact on an SBA 7(a) loan if a seller note on full standby is repaid prematurely without the lender's knowledge?
- What are the specific SBA requirements for a seller's note to be on full standby?
- What specific language must a non-SBA third-party standby agreement include to ensure eligibility?
- How does a lender verify the full standby status of a non-SBA third-party debt?
- Can a full standby seller note accrue interest during the standby period?
- How does a seller note on partial standby affect an SBA 7(a) loan's debt service coverage ratio?
- What documentation is specifically required for a lender to demonstrate proper subordination of a seller note on full standby?
- Can interest accrue and be paid on a seller note while it is on full standby for an SBA 7(a) loan?
- Can a seller note on full standby have an acceleration clause if the business defaults on the SBA loan?
- What specific terms must a lender ensure are included in a standby agreement for a loan from an investor that counts as equity?
- What specific terms are required for a seller note to be on *full* standby for a 7(a) loan?
- What are the consequences if a fully standby seller note is prematurely repaid?
- Can a seller note on partial standby count towards the borrower's equity injection for a 7(a) loan?
- What specific language must a full standby agreement contain to be acceptable to the SBA?
- What specific language must a seller note contain to be considered 'full standby' by the SBA?
- What specific language is required in a seller note's subordination agreement to ensure it counts as full standby equity?
- What happens if a seller note on full standby is repaid early by the borrower without lender approval?
- What happens if a seller note on full standby is repaid without prior lender approval, during the SBA loan term?
- What if a full standby seller note is repaid before the SBA loan is fully satisfied?
- What are the specific requirements for a seller note to qualify as full standby for an SBA 7(a) acquisition loan?
- What are the lien subordination requirements for a seller note on full standby in a 7(a) acquisition?
- How must a lender document the full standby status of a seller note to ensure SBA compliance?
- What specific language must a seller standby agreement include to ensure full standby status for 7(a) equity injection?
- Can a seller note with deferred payments but no interest count as full standby for equity injection?
- Can an investor's loan to the borrower be placed on full standby to count towards the equity injection for a 7(a) loan?
- What specific documentation and conditions are required if a standby agreement is with an associate of the borrower, not the seller?
- Can a seller note on full standby still be secured by specific business assets for a 7(a) loan?
- If a seller note on full standby, can it still accrue interest during the SBA loan term?
- What specific conditions must a seller note meet to be considered "full standby" for equity injection?
- If a seller note on full standby is repaid prematurely, what are the lender's disclosure obligations to the SBA?
- For a seller note on full standby, is it permissible for the accrued interest to capitalize or compound during the SBA 7(a) loan term?
Standby Agreements (21)
- What specific documentation does a lender need to confirm full standby status for a seller note in an acquisition?
- How does a lender verify the full standby status of a non-SBA debt to ensure eligibility for a 7(a) loan?
- What specific conditions allow a seller note with deferred principal payments but immediate interest to qualify as full standby?
- When is a lender required to obtain a subordination agreement for existing business debt?
- How does a lender verify a seller note's full standby status for 7(a) equity injection compliance?
- What are the key requirements for a seller note to qualify as "full standby" for equity injection purposes in a 7(a) acquisition?
- Can a seller note on full standby be repaid early if the business performs exceptionally well and the SBA loan is current?
- When can a lender permit a partial standby seller note if the total equity injection exceeds minimum requirements?
- What are the conditions under which a seller note on full standby can be subordinated to other non-SBA debt?
- What are the specific conditions for an acceptable full standby agreement?
- How does partial standby treatment affect a seller's note for eligibility?
- What happens if a seller note on full standby is repaid early without the lender's knowledge or approval?
- What is the required duration of a full standby seller note for an SBA 7(a) acquisition loan?
- Can a fully-standby seller note accrue and pay interest to the seller during the SBA 7(a) loan's standby period?
- Can a seller note for a $1,000,000 business acquisition be on partial standby for the SBA 7(a) loan?
- What are the specific requirements for a seller note to be on *partial* standby for an SBA 7(a) loan?
- Can a seller note's standby period be shorter than the full term of the SBA 7(a) loan?
- Can a full standby seller note be interest-bearing if interest is deferred until after the SBA loan is repaid?
- Can a partial standby seller note include a provision for interest payments during the standby period?
- What is the required duration of a full standby seller note for an acquisition?
- When can a standby seller note accrue or pay interest during the loan term?
Types of 7(a) Loans (1)
Use of proceeds (7)
- What is the maximum percentage of a 7(a) loan that can be used for working capital in a business acquisition?
- Can a 7(a) loan finance the purchase of undeveloped land for future business expansion?
- Can an SBA 7(a) loan be used to refinance existing business debt that is already fully secured?
- Can a 7(a) loan finance the purchase of intangible assets like customer lists or trade secrets in a business acquisition?
- What is the maximum amount of an SBA 7(a) loan that can be allocated to goodwill in a business acquisition?
- Can a 7(a) loan be used for business working capital to cover inventory purchases for a seasonal business?
- When can a 7(a) loan be used to pay off existing business credit card debt?
Use of Proceeds (1)
Uses of proceeds (2)
Valuation & Underwriting (1)
Working capital (1)
Working Capital (2)
AI summary
This is the lender-facing side of CapBench’s SBA 7(a) Q&A — operational answers for loan officers, credit analysts, and closing teams rather than borrowers. Questions are grouped by topic and cover eligibility, equity injection, change-of- ownership files, servicing, and guaranty purchase, each grounded in the current SBA rulebook (SOP 50 10 8) with the controlling sources cited.
Every entry links to its own page so processing and closing teams can confirm a specific rule quickly. This is general information, not legal, tax, or financial advice, and CapBench is not a lender.
Source: CapBench SBA Intelligence, based on public SBA, lender, franchise, FDIC, and related records. CapBench is not a lender and does not guarantee financing.
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