What are the SBA Terms and Conditions on a 7(a) loan?
Short answer
They are the lender's digital request for SBA's guaranty, covering fees, repayment, use of proceeds, guarantors and collateral. The lender must close under them. SBA does not require signatures on them. Source: SOP 50 10 8.1, Sec. B, Ch. 6, Para. A.
The SBA Terms and Conditions are the lender's digital request for the guaranty, submitted in the SBA Loan System. SOP 50 10 8.1, Appendix 3 and Sec. B, Ch. 6, Para. A (p. 202) define them. They state the deal SBA is guaranteeing.
What they contain (Para. A.3)
- The Upfront Fee and the Lender's Annual Service Fee.
- Repayment terms.
- Use of proceeds.
- Guarantors.
- Collateral, including lien priority.
- Construction terms, if any.
Why they matter to you
SBA's guaranty depends on these terms and on the lender's compliance with them. The lender must close in line with them, including any SBA-approved changes (Para. A).
Your note follows them too. A lender using SBA's note inserts the repayment terms from the Terms and Conditions. A lender using its own note must comply with those terms (Para. D.2).
What happens with the paperwork
SBA does not require signatures on the Terms and Conditions, and they are stored electronically (Para. A). Before disbursement, you must certify that you received a copy or the lender's equivalent (Para. D.8.a).
Changing them after approval
Lenders must not unilaterally approve actions that require prior SBA approval (Para. B.1). SOP 50 57 and SBA's 7(a) Lender Matrix decide which changes need approval. Those two documents are not among the sources behind this page, so ask your lender.
Within 15 business days after final disbursement, the lender must report changes made since the loan number issued (Para. D.11).
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