Glossary · The loan itself
Default Provision
In short
This clause in your loan agreement outlines specific events or failures that trigger a loan default, allowing the lender to demand immediate repayment. You need to understand what constitutes a default to avoid losing the business.
What it means in a deal
A default provision details scenarios like missing payments, failing to maintain insurance, or breaching covenants. In an SBA 7(a) loan, if you default, the lender will first try to work with you, but ultimately can seize collateral or call your personal guarantee. Know these terms before you sign.
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 Provision
- What happens if I default on an SBA 7(a) loan?
- How does a lender request an SBA guaranty purchase after loan default?
- Does a business acquisition involving an earn-out provision complicate SBA 7(a) loan approval?
- Can an earn-out provision in the purchase agreement affect my SBA 7(a) loan approval?
- How does an earn-out provision affect an SBA 7(a) loan for a business acquisition?
- Can a partial standby seller note include a provision for interest payments during the standby period?
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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