Glossary · The loan itself
Predatory lending
In short
This refers to lending practices that are unfair, deceptive, or abusive, often targeting vulnerable borrowers with excessive fees, high interest rates, or terms designed to trap them in debt. The SBA 7(a) program has rules to prevent this.
What it means in a deal
While SBA loans are highly regulated to protect borrowers, it's crucial to understand all loan terms, fees, and interest rates. Predatory practices can include hidden fees, escalating rates, or complex terms designed to obscure the true cost. Always review your loan documents carefully and ask your advisor about anything unclear. The SBA sets maximum interest rates and limits on fees.
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 Predatory lending
- What constitutes prudent lending standards for SBA 7(a) underwriting?
- What specific advantages does the SBA guaranty offer to the *lending bank*?
- What does the SBA 'guaranty' really mean for a bank lending money?
- What constitutes prudent lending standards for SBA 7(a) underwriting regarding credit analysis?
- How does the SBA assess "prudent lending standards" in 7(a) loan underwriting?
- How does the 'not engaged in lending' rule apply to a loan applicant?
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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