Glossary · Doing the deal
Collection effort
In short
A collection effort refers to the actions a lender takes to recover money owed on a defaulted loan, including contacting the borrower, pursuing collateral, and enforcing personal guarantees.
What it means in a deal
If you default on your SBA loan, the lender will initiate collection efforts. This involves demanding payment, liquidating business assets used as collateral, and pursuing your personal guarantee. Understanding this process underscores why you must manage your business's cash flow carefully and communicate with your lender if you face financial difficulties.
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 effort
- What minimum collection efforts must a lender demonstrate before submitting a 7(a) liquidation plan?
- What minimum efforts must a lender demonstrate in collection and recovery before submitting a liquidation plan to the SBA?
- What if my personal credit report shows a minor collection from several years ago?
- Can I use personal assets like a valuable coin collection or art as part of my equity injection?
- What constitutes diligent liquidation efforts a lender must demonstrate before submitting a guaranty purchase request?
- What constitutes "commercially reasonable" efforts by a lender in liquidating collateral for a defaulted 7(a) loan?
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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