Glossary · The loan itself
Full Recourse
In short
This means the lender can pursue all personal assets of the guarantor(s) to recover the debt if the business defaults, not just the pledged collateral. It is a standard feature of SBA 7(a) loans.
What it means in a deal
For an SBA 7(a) loan, all owners with 20% or more equity are typically required to provide a full personal guarantee. This makes the loan 'full recourse,' meaning if the business fails and the collateral isn't enough, the lender can pursue your personal assets (e.g., home equity, savings) to satisfy the debt. Understand this significant personal risk.
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 Full Recourse
- If the SBA issues a denial of the 7(a) guaranty, what recourse or action can the lender take?
- What happens if business assets are insufficient for full loan collateral?
- What is the required duration of a full standby seller note?
- What are the specific conditions for an acceptable full standby agreement?
- Can a full standby seller note accrue interest during the standby period?
- Under what conditions can a seller note on full standby be repaid early?
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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