Glossary · The loan itself
Federally Guaranteed Loan
In short
A loan where a government agency, like the SBA, promises to repay a portion to the lender if the borrower defaults. Buyer cares because this guarantee reduces lender risk, making it easier for small businesses to get loans.
What it means in a deal
The SBA 7(a) loan is a federally guaranteed loan, meaning the SBA guarantees up to 75-90% of the loan amount to the lender. This guarantee is why lenders are willing to fund small business acquisitions that might otherwise be too risky, even with less collateral or a lower down payment.
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 Federally Guaranteed Loan
- What are the lender requirements for pooling and selling the guaranteed portion?
- If my loan is guaranteed by the SBA, does that mean I don't need collateral?
- What are the lender requirements for pooling and selling the guaranteed portion of a 7(a) loan?
- What specific reporting requirements apply to a 7(a) lender after selling the guaranteed portion of a loan?
- What specific representations and warranties must a lender make when selling the guaranteed portion of a 7(a) loan?
- What are the lender's responsibilities after selling the guaranteed portion of a 7(a) loan on the secondary market?
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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