No Lender likes hearing the news that one of their loans has gone into default. For SBA loans, this news can bring extra anxiety given the additional compliance required in SBA loan liquidations. Those familiar with the SBA 7(a) Loan Program understand that the SBA’s decision to honor the guarantee rests in part on a Lender’s compliant handling of a default scenario.
Since 2010, Windsor Advantage has handled hundreds of government guaranteed loan liquidations. This experience has provided Windsor a unique view into risks associated with the process. In this article, we’ll discuss the rules surrounding each of the three main options a Lender has when an SBA 7(a) loan enters default to ensure compliance and risk mitigation for repair or denial.