Glossary · The loan itself
Loss Calculation
In short
How the SBA determines the amount it will pay a lender when a guaranteed loan defaults. It involves subtracting any recoveries the lender made from the outstanding principal and interest.
What it means in a deal
If your business defaults on an SBA loan, the SBA will calculate its loss based on the outstanding balance, interest, and any liquidation expenses, less any proceeds from selling collateral. As the buyer, your primary concern is to avoid default by running a successful business, but understanding this shows how the SBA protects lenders.
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 Loss Calculation
- What steps must a lender take to mitigate loss during loan liquidation before submitting a Universal Purchase Package (UPP)?
- What are the specific requirements for naming the lender as the loss payee on a life insurance policy collateral assignment?
- What specific steps must a lender take to mitigate loss during loan liquidation before submitting a Universal Purchase Package (UPP)?
- How does a seller note on full standby affect the debt service coverage ratio calculation?
- How does the '90-day rule' affect the calculation of SBA upfront guaranty fees for multiple loans?
- How does the ongoing servicing fee affect the annual percentage rate (APR) calculation for a 7(a) loan?
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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