What rights do you give up when you sign SBA Form 148?
Short answer
A lot. SBA Form 148 waives rights such as notice of default and many defenses, including that the lender impaired collateral or mishandled a sale. The lender can change the loan terms without your consent, except to raise the amount due. Source: SBA Form 148, paras. 4 and 6.
You give up several rights, to the extent the law permits. SBA Form 148 is SBA's Unconditional Guarantee form. Lenders may use their own equivalent form (SOP 50 10 8.1, Sec. B, Ch. 6, Para. D.4), so read the one you sign.
What the lender can do without asking (para. 4)
- Modify the note, except to increase the amounts due.
- Release a borrower or another guarantor.
- Settle with anyone on the note.
- Substitute or release collateral.
- Foreclose on or sell collateral, publicly or privately.
The form says these actions do not release or reduce your obligation.
Rights and notices you waive (paras. 6.A and 6.B)
- Requiring the lender to demand payment from the borrower first.
- Redeeming collateral before or after a sale.
- Having a sale advertised or a valuation done.
- Notice of default, acceleration or changes to the note.
Defenses you waive (para. 6.C)
You cannot later argue that the lender:
- Failed to get or perfect a lien.
- Impaired collateral or sold it below value.
- Made errors in the loan documents or administration.
- Sought payment from you first.
You also waive any defense that the borrower has avoided liability on the note.
Limits
If the lender raises the amount due without your consent, you are not liable for the increase (para. 6.C.14). Oral statements cannot contradict the written terms (para. 9.H). The form leaves space for state-specific provisions (para. 10).
Have your own attorney review it before you sign.
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