Glossary · The loan itself
Guaranty Purchase
In short
When a defaulted SBA loan is too far gone for the lender to collect, the SBA "buys" the guaranteed portion of the loan from the lender. This kicks off the SBA's own collection efforts.
What it means in a deal
If your business defaults on an SBA loan and the lender can't recover sufficient funds, they'll submit a "guaranty purchase request" to the SBA. The SBA then pays the lender the guaranteed percentage of the outstanding balance. This doesn't relieve you of your debt; the SBA just takes over collection for the guaranteed part, potentially leading to a "call of the guaranty" and personal collection.
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 Guaranty Purchase
- What documentation is required to request a guaranty purchase using the Universal Purchase Package (UPP)?
- What specific documentation must a lender include in a Universal Purchase Package (UPP) for a guaranty purchase?
- What documentation is required for a lender to request a guaranty purchase using the Universal Purchase Package (UPP)?
- What impact does a lender's failure to obtain a required personal guaranty have on a guaranty purchase request?
- What are the key elements a lender must include in a Universal Purchase Package (UPP) submission for guaranty purchase?
- What specific documentation is required for a lender to request a guaranty purchase using the Universal Purchase Package (UPP)?
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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