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Principal compromise is a viable option when an SBA 7(a) loan runs into trouble, and the only other option is SBA loan liquidation. It’s helpful for the business owner, because it allows them to keep on keeping on. But there are some significant risks and potential “gotchas” for the Lender, especially when navigating SBA SOP 50 57 guidance. Let’s take a look.

Managing SBA Chapter 11 Bankruptcies The hard economic reality right now is that small business bankruptcies are on the rise. So let’s look at what you can do to prepare your SBA Lending team to protect the guaranty, control costs, and maintain SBA compliance while meeting evolving SBA lender requirements. As Benjamin Franklin said so long ago, an ounce of prevention is worth a pound of cure.

The SBA Form 1502 report may be everyone’s least-favorite aspect of SBA 7(a) lending. It’s a source of anxiety for both the SBA 1502 expert on your team as well as your senior management. Your 1502 worker-bees know it’s the mechanics of the SBA Form 1502 report where the problems start – missing reconciliations, inconsistent timelines, unsupported recoveries, and so on. Researching these issues is time-consuming, frustrating, and anxiety-producing. We’ve heard people calling

If you’ve followed us for any length of time, or if you’ve had the pleasure (!) of being a client, you know we love SBA Lending. In fact, you may know that we happily and proudly call ourselves SBA Geeks. We truly enjoy helping our bank clients meet the needs of the small businesses in their community – the businesses that are the backbone of our country’s economy.

Lenders have always been responsible for verifying owners’ citizenship and residency according to SBA SOP 50 10 8. But beginning January 1st of 2026, and then again as of March 1st, standards have changed and are being enforced with greater precision. In short, ownership eligibility now more than ever is a key consideration for SBA compliance.

Equity injection is a common stumbling block for many SBA Lenders, causing problems with SBA loan reviews and SBA guaranty purchase requests. Learn more

Inadequate documentation of equity injection is one of the most common issues cited in SBA loan reviews and guaranty purchase requests, often resulting in SBA compliance concerns for lenders. This is despite the fact that in many cases the injection actually did happen correctly. Why the problems? It’s usually about the audit trail, not about whether the Borrower had the money. If you can provide consistent documentation, starting at origination, according to SBA’s injection

There are two primary ways Lenders run into trouble with loan originations. The first – Screen-Outs – applies only during General Processing (GP) submissions. The second – Compliance Code Holds – occurs within the automated SBA compliance engine, applying to both GP and Preferred Lender Program (PLP) submissions.

Let’s start with a sense of real urgency: all SBA Form 1502 errors reported to you by the FTA should be handled as your top priority, in the same month as you’re notified. Why? Because if the mismatches aren’t corrected in the reporting month, corrections are likely to become more complex, and the mismatches may continue to increase.

Have you ever filed a lien and found you're not in the required lien position on business assets? Or maybe you’ve refinanced debt from another Lender – and then found out they won't release the lien? Let’s talk! There are a few liens that can sneak ahead of your new loan’s filings. These include landlord liens, franchisor liens, or seller liens when the seller provided carryback financing.

Too often, loan changes occur—whether minor borrower updates or significant structural modifications—without being fully reflected in E-Tran. That oversight can result in servicing issues, audit flags, or worse: denial of the SBA guarantee. Here’s why every lender should treat E-Tran updates as an important part of their SBA loan servicing workflow.

Applicant certification requirements under the recently-released SOP 50 10 8 are a mix of new, changed, and familiar. Many of the Applicant certifications can be found in the current Form 1919 from February 2025. However, we’ve heard that an updated Form 1919 is on the way, though its release date – and its changes – haven’t yet been announced.

The Office of Credit Risk Management (OCRM) picked your SBA portfolio to conduct an audit. It could be due to anything from a random...

We often see Lenders forget to take advantage of the support a Lender Service Provider (LSP) can offer. So, when should you lean on an...

Part I of our series on how to handle the SBA portfolio during a merger – discussed what you need to do before the merger: assessing the...

Mergers are seldom easy, no matter what industry you’re in. Bank mergers, with all the associated regulations and financial...

Banks have a deserved reputation of being traditionalists, slow to adopt new technologies and often bound up in “how we’ve always done it...

Do you remember our article back in 2022 on Electronic Loan File Stacking , a.k.a ELFS? Maybe not – 2022 was a long time ago! In that...

We’d be willing to bet that your team has some creative workarounds for the sometimes annoying, yet generally unavoidable mismatches...

As part of our SBA lender consulting services, we’re often contracted to complete loan reviews. Whether it’s a post-closing review, an...