Glossary · The loan itself
Event of Default
In short
A failure to meet the terms of your loan agreement, such as missing payments or violating covenants. This triggers the lender's right to take action, potentially demanding full repayment.
What it means in a deal
If you trigger an Event of Default on your SBA 7(a) loan, the lender can declare the entire loan due immediately. This can lead to the "Acceleration of Debt" and liquidation of collateral. Understand all loan covenants, not just payment terms, to avoid this serious situation.
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 Event of Default
- How does a lender assess the impact of a significant post-closing event on the borrower's ability to repay a 7(a) loan?
- What happens if a significant post-closing event impacts the borrower's ability to repay an SBA 7(a) loan?
- What is the specific timeframe for a lender to notify the SBA of a 7(a) loan default?
- What happens if I default on an SBA 7(a) loan?
- What constitutes a "material default" by a 7(a) lender that would lead to an outright denial of a guaranty purchase request?
- How does a lender request an SBA guaranty purchase after loan 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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