Glossary · The loan itself
Defaulted loan
In short
A loan is defaulted when the borrower fails to meet the terms of the loan agreement, most commonly by missing payments. This triggers serious consequences for both the borrower and the lender.
What it means in a deal
If your SBA loan defaults, the lender can pursue collection actions, including enforcing personal guarantees and liquidating collateral. A default can severely damage your credit and lead to personal judgments. Understand all the conditions in your loan agreement to avoid default and protect your investment and personal assets.
Related terms
Common questions about Defaulted loan
- Can an owner who previously defaulted on a *personal* loan get an SBA 7(a) loan?
- Can I get an SBA 7(a) loan if I have defaulted on a previous federal debt?
- What constitutes "commercially reasonable" efforts by a lender in liquidating collateral for a defaulted 7(a) loan?
- What is the role of a "workout plan" in the liquidation of a defaulted 7(a) loan?
- What is the key impact of a 'repair' on an SBA guaranty purchase request for a defaulted loan?
- What is the maximum timeframe for a lender to submit a liquidation plan 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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