Banks, savings and loans, credit unions, and other specialized lenders participate with SBA on a deferred basis to provide small business loans that are structured under 7(a) guidelines. Lending partners must execute an SBA Form 750, Deferred Participation Agreement, which establishes the terms under which SBA will guarantee a loan submitted by the lender.

When a lending partner applies to SBA for a guaranty on a proposed loan, it must certify that it would only make the loan if SBA guarantees it. SBA then decides whether to guarantee the loan based on the information provided in the loan application.

When a loan is guaranteed by SBA, certain conditions are imposed on the lending institution. Some of these conditions are related to how the lender must close and administer the account; others are imposed on the borrower, and pertain to the business or its owner(s). The borrower must agree to these requirements as a condition for obtaining the loan.

If a guaranteed loan defaults, the lender may request SBA to purchase the guaranteed portion.

SBA offers its lending partners a variety of methods for applying for a guaranty on proposed loans. The differences are related to the levels of authority and responsibility the lender and SBA have in making decisions associated with processing, closing, and administering each loan. Lenders are given authority to take on more of these responsibilities based on their experience and performance with SBA. The better a lender has conducted its analysis and performed administrative functions in the past, the more likely SBA will not have to re-analyze or check these factors in the future.


To participate in the 7(a) Loan Program, a lender must meet the following requirements as indicated in the Code of Federal Regulations (CFR):

  • Have a continuing ability to evaluate, process, close, disburse, service and liquidate small business loans;

  • Be open to the public for the making of such loans (and not be a financing subsidiary, engaged primarily in financing the operations of an affiliate);

  • Have continuing good character and reputation, and otherwise meet and maintain the ethical requirements as identified in 13 CFR Sec. 120.140;

  • Be supervised and examined by a state or Federal regulatory authority, satisfactory to SBA.

For More Information

For more information and to begin a lending partner relationship with SBA, contact the local SBA District Office.

To submit a standard 7(a) guaranty application, view the Standard 7(a) Guaranty Application Submission Instructions.

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