What does it mean when SBA buys the guaranty on your loan?
Short answer
It means SBA paid its guaranteed share to the lender or investor after a default. Your debt continues. A lender may request purchase once an installment is over 60 calendar days in default and business personal property has been liquidated. Source: 13 CFR 120.520.
It means SBA paid its guaranteed share to the lender or investor. Your debt continues. SBA's lender page says a lender may ask SBA to buy the guaranteed portion if a borrower defaults.
When a lender can ask
For loans approved on or after May 14, 2007, 13 CFR 120.520(a)(1) allows a demand when both are true:
- An installment is in default for more than 60 calendar days and remains uncured.
- All business personal property securing the loan has been liquidated.
If you cure before the request, that right lapses. SBA may also buy the guaranteed portion at any time, in its sole discretion.
What changes for you
- On a fixed rate, the rate stays as stated in the note (13 CFR 120.521).
- On a variable rate, you owe the rate in effect at your earliest uncured payment default.
- SBA's 7(a) page says payments on SBA-purchased 7(a) loans can only be made through the SBA Loan Portal (read November 8, 2026).
The lender generally remains responsible for servicing and liquidation until SBA honors the guarantee in full (13 CFR 120.524(e)).
What does not change
A guarantor stays liable after SBA pays (SBA Form 148, para. 9.B). SBA may convert the loan to a direct loan without your consent (13 CFR 120.545(b)). It may also sell purchased loans in asset sales (13 CFR 120.546).
SBA can refuse to pay
SBA can be released from its guarantee if the lender materially failed to meet program requirements (13 CFR 120.524(a)). The release can be whole or partial. That is a dispute between SBA and the lender.
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