Glossary · The loan itself
Collection Action
In short
Steps taken by a lender or creditor to recover money owed when a borrower fails to make payments. For SBA loans, this can lead to serious consequences, including the SBA "calling" its guaranty.
What it means in a deal
If you default on your SBA loan, the lender will initiate Collection Action, which can involve seizing collateral, pursuing legal judgments, and ultimately triggering the SBA guaranty. Understanding your repayment capacity and having a solid business plan is key to avoiding this outcome. Your personal guarantee means this will affect you directly.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Collection Action
- What specific actions constitute an 'unapproved material servicing action' that could lead to a 7(a) guaranty repair or denial?
- What if my personal credit report shows a minor collection from several years ago?
- What minimum collection efforts must a lender demonstrate before submitting a 7(a) liquidation plan?
- Can I use personal assets like a valuable coin collection or art as part of my equity injection?
- What minimum efforts must a lender demonstrate in collection and recovery before submitting a liquidation plan to the SBA?
- How does an unapproved material servicing action impact the SBA's 7(a) loan guaranty?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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