Glossary · The loan itself
Default
In short
Default occurs when a borrower fails to meet the terms of their loan agreement, most commonly by missing payments. This is a serious event that triggers the lender's right to take action, including calling your Personal Guarantee.
What it means in a deal
If your business loan goes into Default, the lender will first try to work with you to cure the issue. However, if uncorrected, they will initiate collection actions, potentially including the Call of the Guaranty and foreclosure on Collateral. A Default can severely impact your credit and future borrowing capacity.
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 Default
- What happens if I default on an SBA 7(a) loan?
- How does a lender request an SBA guaranty purchase after loan default?
- What constitutes 'prudent liquidation' for a 7(a) loan to protect the SBA guaranty during default?
- What are a lender's primary responsibilities once a 7(a) loan enters liquidation after default?
- Will a past federal student loan default, now rehabilitated, affect my SBA 7(a) loan approval?
- What are the specific consequences if I default on my personal guaranty for an SBA 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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