Reference

SBA loan glossary

50 terms used across SBA 7(a) and 504 lending, defined in plain language and sourced to SBA program rules, not recycled from other glossaries.

By Mario Bailey · Updated 2026-07-08

Every definition below traces to a primary source where one exists: an SBA regulation (13 CFR), an SBA Standard Operating Procedure (SOP 50 10 8, effective June 1, 2025, or SOP 50 57 4), an SBA form, or an official SBA fee notice. Numbers describe current program rules, not this site's funded-loan data, and SBA updates rules and fee schedules on its own schedule, so confirm anything time-sensitive with a participating lender before you rely on it. Where a term has no single official SBA definition, that is noted in plain language rather than invented.

Programs

The loan products themselves: 7(a), 504, and their subprograms.

7(a) loan: The SBA's flagship, general-purpose loan program: guaranteed financing for working capital, equipment, inventory, debt refinancing, business acquisition, or owner-occupied real estate. A single 7(a) loan tops out at $5 million; as of July 4, 2026 a borrower can combine a 7(a) with a 504 loan for up to $10 million in total SBA-backed financing.; How SBA loans work → Types of SBA loans →
7(a) Small Loan: A formal SBA classification for term 7(a) loans of $350,000 or less, eligible for streamlined, credit-scored underwriting (the minimum SBSS score rose to 165 under SOP 50 10 8). It is distinct from SBA Express: a Small Loan keeps the standard 75%/85% guarantee tiers, while Express trades guarantee percentage for turnaround speed.; SBA loan documents required → Types of SBA loans →
504 loan: A financing structure for major fixed assets, mainly owner-occupied commercial real estate and long-term equipment, delivered through a bank plus a Certified Development Company. A typical deal runs about 50% bank first-lien, 40% CDC/SBA second-lien at a long fixed rate, and 10% borrower down payment; the SBA-backed portion tops out at $5 million ($5.5 million for certain manufacturers and energy-efficient projects).; The SBA 504 loan, explained → 504 loan calculator →
CAPLines: A family of 7(a) loans structured as revolving or draw-down lines of credit rather than lump-sum term loans, for cyclical or contract-driven working-capital needs. Under SOP 50 10 8 there are four current types: Seasonal, Contract, Builders, and Working (the asset-based line secured by receivables and inventory).; SBA CAPLines →
Community Advantage: A 7(a) delivery channel, capped at $350,000, that routes lending through mission-oriented, mostly nonprofit lenders (CA SBLCs) into underserved markets: low-to-moderate income areas, HUBZones, businesses under two years old, or those at least 51% veteran-owned. SBA reinstated a moratorium on new CA SBLC licenses effective May 19, 2025, after the program posted a 7% trailing default rate, more than double the overall 7(a) portfolio.; SBA Community Advantage loans →
Economic Injury Disaster Loan (EIDL): A loan the SBA funds and disburses directly, with no bank in between, for working capital and normal operating expenses at a business in a declared disaster area that SBA determines cannot get credit elsewhere. The rate does not exceed 4%, terms run up to 30 years, and EIDL shares a combined $2 million cap with SBA physical disaster business loans on the same declared event.; SBA disaster loans →
Export Express: The SBA Express model applied to export financing: delegated lender authority, a fast SBA turnaround, and a $500,000 cap, but a richer guarantee than standard Express, 90% on loans of $350,000 or less and 75% from $350,001 to $500,000.; SBA export loan programs →
Export Working Capital Program (EWCP): A 7(a) delivery method that finances the working-capital gap between taking an export order and getting paid for it. Maximum loan amount is $5 million with a 90% SBA guarantee, capped at $4.5 million in guaranteed dollars, and its own maturity-based guaranty-fee schedule rather than the standard 7(a) fee tiers.; SBA export loan programs →
International Trade Loan: A 7(a) delivery method for businesses that export, are developing export markets, or have been hurt by import competition, combining fixed-asset financing, working capital, and eligible debt refinancing in one loan. Maximum financing is $5 million with a 90% guarantee capped at $4.5 million in guaranteed dollars, the same rich guarantee as EWCP.; SBA export loan programs →
Microloan: An SBA program capped at $50,000 per loan (the SBA reports an average closer to $13,000), funded not by banks but by approved nonprofit intermediary lenders that also provide required business training. It cannot fund a real estate purchase or pay off existing debt, and it runs on a separate track from the 7(a)/504 lender data this site tracks.; SBA microloans →
SBA Express: A streamlined 7(a) delivery method that trades guarantee size for speed: lenders get a faster SBA response in exchange for a smaller guarantee, typically 50%, and a lower loan cap of $500,000. It can be structured as a term loan or a revolving line of credit.; SBA Express loans →

Players

The lenders, delegated authorities, and services that move a loan through the system.

Accredited Lenders Program (ALP): The 504 analog to 7(a)'s PLP: expedited SBA processing for CDCs with an established track record, though final approval authority stays with SBA, unlike the Premier Certified Lenders Program.; SBA Preferred Lenders (PLP) →
Certified Development Company (CDC): A nonprofit certified by SBA to deliver the SBA-backed second-lien portion of a 504 loan, working alongside a bank and the borrower to assemble the financing and handle the SBA-side paperwork. On a 504 loan, the CDC plays the role a bank plays on a 7(a) loan.; The SBA 504 loan, explained → All lenders →
Certified Lenders Program (CLP): A legacy 7(a) delegation tier, a step below PLP authority, that gave lenders a faster review using their own forms while SBA retained final approval. It shows up as a shrinking, largely discontinued category in current funded-loan data as lenders have consolidated onto PLP or non-delegated processing.; SBA Preferred Lenders (PLP) →
Fiscal & Transfer Agent (FTA): SBA's contracted registry and paying agent for the 7(a) secondary market, currently Guidehouse (a role historically held by Colson Services). The FTA records every sale of a guaranteed loan portion or SBA pool certificate and processes lender payment reporting and investor payments.; How the SBA guarantee actually works →
Lender Match: SBA's free service connecting borrowers to participating lenders based on their stated financing need. This site's own Lender Match tool applies the same idea to real funded-loan data, ranking lenders by their actual track record in your state and industry rather than by who signs up to be listed.; SBA Lender Match →
Preferred Lenders Program (PLP): SBA's delegated-authority tier for standard 7(a) lending: a PLP lender makes the credit decision and approves the SBA guaranty in-house instead of routing each file to SBA for review, which usually means a faster decision. SBA does not publish a public PLP roster; this site's Preferred Lenders page shows the processing record straight from the funded-loan data instead.; SBA Preferred Lenders (PLP) →
Premier Certified Lenders Program (PCLP): The 504 program's fullest delegation tier: a CDC with PCLP status can approve loans in-house, but in exchange takes on a share of the loss risk on the SBA-guaranteed debenture, unlike an ALP CDC, which carries no added loss exposure.; SBA Preferred Lenders (PLP) →

Terms & costs

The mechanics and the money: guarantees, fees, collateral, and how a loan is priced.

Annual service fee: An ongoing fee, 0.55% of the outstanding guaranteed balance as of fiscal year 2026, that the lender, not the borrower, pays SBA every year a 7(a) loan is outstanding. Unlike the upfront guaranty fee, lenders cannot pass this one on to the borrower.; How the SBA guarantee actually works →
Blanket lien: A security interest, filed as a UCC-1, that covers essentially all of a business's assets rather than one specific piece of collateral. SBA lenders commonly take a blanket lien on business assets as the first layer of collateral on a 7(a) loan before adding real estate or other liens.; Do SBA loans require collateral →
Charge-off: An accounting event: the lender or SBA writes a defaulted loan off its books as a loss. It is not forgiveness and does not erase what a guarantor owes; charge-off is reported only on 7(a) loans in the public data (the 504 dataset never carries a charge-off flag), and the rate falls sharply as loan size rises.; What predicts an SBA loan charge-off →
Collateral: Assets pledged to secure a loan. SBA does not require a 7(a) loan to be fully collateralized: small loans (commonly up to $50,000) generally are not required to be secured at all, and SBA will not decline an otherwise-sound loan solely for a collateral shortfall. On a 504 loan, the financed real estate or equipment itself is the collateral.; Do SBA loans require collateral →
Debenture: The bond that funds the CDC/SBA second-lien portion of a 504 loan, sold to investors and priced at issuance to set that portion's long-term fixed rate. It also carries its own declining prepayment penalty over roughly the first half of the loan's term.; The SBA 504 loan, explained → SBA loan prepayment penalty →
Debt Service Coverage Ratio (DSCR): Cash flow available for debt service divided by total loan payments, the core measure a lender uses to decide whether a business can support a proposed SBA loan. SBA's current SOP sets a minimum projected DSCR of 1.15 for a business-acquisition loan, though most lenders underwrite to 1.25 or higher in practice.; SBA loans to buy a business → SBA loan affordability calculator →
Equity injection: The cash, or other SBA-eligible source, a borrower contributes toward total project cost, alongside the loan. Under SOP 50 10 8 (effective June 1, 2025) the minimum is 10% of total project costs for a startup or a complete change of ownership; a 504 down payment commonly rises to 15%-20% for a startup or a special-purpose property.; SBA loan down payment and equity requirements →
Goodwill financing: The portion of a business-acquisition loan that funds the target's intangible value (its brand, customer relationships, and earning power) rather than its tangible assets. The SBA 7(a) program permits financing goodwill as part of a change-of-ownership loan, a meaningful difference from many conventional lenders that will not lend against it at all.; SBA loans to buy a business →
Guaranty fee: An upfront fee charged on the guaranteed portion of a 7(a) loan, not the full loan amount, paid by the borrower and usually financed into the loan. For fiscal year 2026 the standard schedule runs 2% on the guaranteed portion of loans of $150,000 or less up to 3.5%-3.75% on larger loans, with a flat 0.25% on loans maturing in 12 months or less.; SBA guaranty fee calculator → How the SBA guarantee actually works →
Personal guarantee: Under 13 CFR 120.160, every individual or entity owning 20% or more of an SBA borrower must sign a full, unconditional personal guarantee, with no dollar cap, on SBA Form 148. It is separate from collateral: a loan can be under-collateralized and still close, but the 20%-or-more personal guarantee is effectively always required.; The SBA personal guarantee, explained precisely →
Prepayment penalty: A fee for paying down an SBA loan early. Most 7(a) loans carry none; the exception is a loan with a maturity of 15 years or longer where the borrower voluntarily prepays 25% or more of the balance within the first three years, triggering 5% in year one, 3% in year two, and 1% in year three. A 504 loan carries its own declining penalty tied to its debenture.; Do SBA loans have a prepayment penalty →
SBA guarantee: SBA's promise to reimburse a lender for a share of its loss if a loan defaults, not a promise to the borrower and not loan forgiveness. On a standard 7(a) loan the guarantee runs up to 85% on loans of $150,000 or less and up to 75% above that (13 CFR 120.210); the borrower still owes 100% of the loan regardless of the guaranteed share.; How the SBA guarantee actually works →
Secondary market: The market where a 7(a) lender sells the guaranteed portion of a funded loan to an investor, using SBA Form 1086, with the sale recorded through SBA's Fiscal & Transfer Agent. It returns capital to the lender to fund the next loan, a structural reason 7(a) lending scales the way it does.; How the SBA guarantee actually works →
Standby (seller note): A seller note counted toward the buyer's equity injection on an acquisition, but only if it sits on full standby, no principal or interest payments, for the entire term of the SBA loan. Under the current SOP a standby seller note cannot exceed 50% of the required equity injection, so a buyer still needs cash or another qualifying source for the rest.; SBA loans to buy a business →
Working capital: Funds used for a business's short-term operating needs (payroll, inventory, accounts payable, day-to-day expenses) rather than a long-term asset purchase. It is one of the most flexible eligible uses under the 7(a) program and the reason revolving CAPLines and SBA Express exist alongside standard term loans.; Types of SBA loans → SBA CAPLines →

Process

The paperwork, procedure, and what happens when a loan goes bad.

Change of ownership: SBA's term for a loan that funds the purchase of an existing business, in whole or in part, rather than starting one from scratch or financing an operating business's ongoing needs. A complete change of ownership triggers the current 10% minimum equity injection, an independent business valuation, and underwriting of the target's historical cash flow rather than the buyer's own track record.; SBA loans to buy a business →
Delegated authority: SBA's practice of letting an experienced, approved lender make the credit decision and close a loan without SBA reviewing the file first. It underlies PLP and CLP on the 7(a) side, ALP and PCLP on the 504 side, and every SBA Express loan, and it is the main reason some lenders move noticeably faster than others.; How to choose an SBA lender →
Guarantee purchase: The step where, after liquidation fails to fully recover a defaulted loan, the lender asks SBA to honor its guarantee and SBA reimburses the lender for its guaranteed share of the shortfall. It shifts the lender's loss to SBA; it does not reduce what the borrower and any guarantors still owe, which SBA can then pursue directly.; What happens if you default on an SBA loan →
Liquidation: The formal status an SBA loan enters once an uncured payment default is reported to SBA: the lender liquidates available collateral, business assets first and then real estate, and applies the proceeds to the balance. Full liquidation of pledged collateral is generally required before SBA will consider a settlement of what remains.; What happens if you default on an SBA loan →
Offer in Compromise: SBA's process, via Form 1150, for settling a defaulted SBA debt for less than the full amount owed. It generally requires collateral already liquidated, no active bankruptcy, and an offer SBA judges realistic against what it could otherwise recover through collection, liens, and garnishment, not simply the lowest number a borrower proposes.; What happens if you default on an SBA loan →
Personal financial statement (PFS): A sworn statement of an individual's assets, liabilities, and net worth, required from every owner of 20% or more and every proposed guarantor as part of an SBA application, dated within about 90 days of submission. A non-owner spouse commonly signs one too, since a spousal signature can be required on the guaranty documents regardless of ownership share.; SBA loan documents required →
SBA Form 148: The Unconditional Guarantee, the standard instrument every owner of 20% or more signs to personally guarantee an SBA loan. It carries no dollar cap: the guarantor is liable for the full unpaid balance, accrued interest, and collection costs, not a share tied to their ownership percentage.; The SBA personal guarantee, explained precisely →
SBA Form 1919: The Borrower Information Form, the core document in a 7(a) application, completed by every proprietor, general partner, officer, director, managing member, and owner of 20% or more, plus any entity owner. It is a borrower-side form, distinct from SBA Form 1920, the lender-side application for guaranty that SBA eliminated in December 2023.; SBA loan documents required →
SOP 50 10: SBA's Standard Operating Procedure for Lender and Development Company Loan Programs, the master rulebook lenders and CDCs follow for 7(a) and 504 origination, underwriting, and servicing. The current edition is SOP 50 10 8, effective June 1, 2025, and each new edition can revise requirements such as equity injection, guarantee percentages, and delegated authority.; The SBA personal guarantee, explained precisely →
SOP 50 57: SBA's Standard Operating Procedure governing 7(a) loan servicing and liquidation: the rulebook for what a lender must do once a loan is troubled, including site-visit deadlines, monthly status reporting to SBA, and the path into liquidation. The current edition is SOP 50 57 4.; What happens if you default on an SBA loan →
Use of proceeds: The specific, stated purpose an SBA loan funds (working capital, equipment, real estate, refinancing, or acquisition), disclosed in the application and restricted to eligible business purposes under SBA rule. Lenders document it closely because it drives both underwriting and, on real estate deals, the applicable owner-occupancy requirement.; SBA loan documents required →
Workout: A lender's attempt to resolve a missed SBA loan payment short of formal default, through deferment, a modified payment schedule, or forbearance. Most loans that hit a rough patch are resolved at this stage and never move into liquidation.; What happens if you default on an SBA loan →

Eligibility

What determines whether a business, and a property, qualify.

Affiliation: SBA's rule, under 13 CFR 121.301 and 121.103, requiring a business's size to include the receipts or employees of any affiliate it controls or is controlled by, not just the applicant entity alone. Affiliation can push a business that looks small on its own over its size standard once a parent, sister company, or a common owner's other concerns are counted in.; Who qualifies for an SBA loan → SBA size-standard lookup →
NAICS code: The North American Industry Classification System code that identifies a business's industry. SBA assigns size standards, and this site reports industry-level lending figures, by 6-digit NAICS code, so it is the starting point for checking whether a business counts as small.; SBA size-standard lookup → SBA lending by industry →
Owner-occupied (51% occupancy rule): The requirement, under 13 CFR 120.131, that a business borrowing to buy or build real estate occupy most of it rather than operate primarily as a landlord: at least 51% of an existing building's rentable space, or 60% of new construction (with a path to 80% within a set period), leasing out no more than the remainder. It applies to real estate financed under both the 7(a) and 504 programs.; The SBA 504 loan, explained →
SBA Franchise Directory: SBA's list of franchise brands reviewed for SBA loan eligibility. If a brand is listed and in good standing, financing generally proceeds like any other SBA loan; if it is not listed, a lender may not be able to use SBA financing for that unit at all.; SBA loan for a franchise → SBA lending by franchise →
Size standard: The largest a business can be, set per 6-digit NAICS code under 13 CFR 121.201, and still count as small for SBA loan eligibility. Depending on the industry it is measured either in average annual receipts or number of employees, and a business over its standard generally does not qualify for an SBA loan.; SBA size-standard lookup →

Disclaimer. Program rules and figures come from the U.S. Small Business Administration (sba.gov), the current SBA Standard Operating Procedures, and the Code of Federal Regulations, not from this site's funded-loan data. SBA Loan Index is not affiliated with the SBA and is not a lender, broker, or financial advisor. This is general information, not individualized financial or legal advice; verify current terms with the SBA and a participating lender before you rely on them.

Cite this analysis

Mario Bailey. (2026). SBA loan glossary. SBA Loan Index. https://sbaloanindex.com/glossary/

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