What happens if you miss a payment on an SBA loan?
Short answer
A lender may charge up to 5% of the regular payment when more than 10 days late. After more than 29 days unpaid, the loan is not current under SBA rules. Sources: 13 CFR 120.221(d); SOP 50 10 8.1, Sec. A, Ch. 1, Para. E.
A late fee can come first. A 7(a) lender may charge up to 5% of the regular payment when more than 10 days late. See 13 CFR 120.221(d) and SOP 50 10 8.1, Sec. A, Ch. 4, Para. C.2.d. The fee belongs to the lender, and SBA's guaranty does not cover it.
When a loan stops being current
SBA treats a loan as not current when a required payment stays unpaid for more than 29 days (Sec. A, Ch. 1, Para. E). While it is not current:
- Your business cannot get a new 7(a) or 504 loan number.
- Refinancing needs a debt current for at least the last 12 months or the life of the loan, whichever is less (Appendix 14, Para. A).
Credit reporting
Lenders are required to report to credit agencies when they extend credit on an SBA loan. They should keep reporting servicing, liquidation and charge-off activity (Sec. B, Ch. 6, Para. D.7).
If the default continues
Once an installment is more than 60 calendar days in default and uncured, a lender may ask SBA to honor its guarantee. Business personal property securing the loan must be liquidated first (13 CFR 120.520(a)(1)).
On a 504 loan
Payments received after the 15th may carry a late fee. It is 5% of the late payment or $100, whichever is greater (13 CFR 120.971(a)(4)).
Call before you miss
Talk to your lender early. SBA permits deferments and other changes, and your lender can explain which apply to your loan.
Ask lending partners about your loan
Tell us the amount you need and what it is for. We refer you to lenders that may fund businesses like yours, and it costs you nothing.
Janover Capital LLC is not a lender and is not the SBA. The lender makes the credit decision. A lender or marketplace may pay us a referral fee if we connect you, at no cost to you. Advertiser disclosure.