Glossary · The loan itself
Conventional Lending Practices
In short
The standard loan underwriting and approval criteria used by banks for loans not backed by government guarantees. SBA loans often bridge gaps where conventional financing isn't available.
What it means in a deal
The SBA requires lenders to follow prudent conventional lending practices even for guaranteed loans. This means the loan must be structured soundly, with proper collateral and repayment analysis, even if the SBA provides a guaranty. The "credit elsewhere test" ensures you can't get a conventional loan first.
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 Conventional Lending Practices
- How do SBA loan rates compare to conventional bank loan rates for business acquisitions?
- What makes an SBA 7(a) loan more attractive than a conventional bank loan?
- Are SBA 7(a) loan interest rates typically higher or lower than conventional bank loans?
- What key advantages does an SBA 7(a) loan offer over a conventional bank loan?
- What are the primary distinctions between an SBA 7(a) loan and a conventional bank loan?
- Are there any disadvantages to getting an SBA 7(a) loan compared to a conventional 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.
See which SBA lenders would fund your deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to approve a 7(a) like yours and flag what trips up approval.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.