Glossary · The loan itself
Default Procedure
In short
The formal steps a lender takes when a borrower fails to meet loan terms, like missing payments. Understanding this process is key to knowing your risks.
What it means in a deal
If you default on your SBA 7(a) loan, the lender follows a specific default procedure, first attempting to cure the default, then moving to liquidation and collateral seizure. This impacts your business and personal assets due to the personal guarantee.
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 Procedure
- What is the correct procedure for a lender to amend an E-Tran application after initial submission but before authorization?
- What is the correct procedure for a lender to request a material amendment to an already authorized 7(a) loan in E-Tran?
- 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?
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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