Glossary · The loan itself
Subrogation
In short
This is the legal right of the SBA, after paying a lender on a defaulted loan, to step into the lender's shoes and collect from the borrower or guarantors. It means you still owe the SBA directly.
What it means in a deal
If your 7(a) loan defaults and the SBA pays the lender's guaranty claim, the SBA then has the right of Subrogation. This means they will pursue collection directly from you, your personal guarantee, and any pledged collateral. Don't think defaulting means you're off the hook.
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
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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