Glossary · Doing the deal
Lender's Default
In short
This occurs when the lender fails to uphold its obligations under the loan agreement, like failing to disburse funds. It's rare but can disrupt your acquisition and cause financial harm.
What it means in a deal
While the SBA backs a portion of the loan, the lender is responsible for its terms. If a lender defaults on its commitments, you may have legal recourse. Your loan agreement should clearly outline the lender's obligations and your rights in such a scenario.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Lender's Default
- What are a lender's primary responsibilities once a 7(a) loan enters liquidation after default?
- What are a lender's primary responsibilities immediately after a 7(a) loan enters liquidation after default?
- How does a lender request an SBA guaranty purchase after loan default?
- What is the SBA's expectation for a lender's 'workout plan' for a defaulted 7(a) loan prior to liquidation?
- What specific steps must a lender take to secure collateral immediately upon a 7(a) loan default?
- What is the timeframe for a lender to submit a Universal Purchase Package (UPP) 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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