Questions Concerning SBA Section 7(a) Business Loans

The Small Business Administration's (SBA) treatment of the requirement for notification of defaults in section 7(a) business loans was questioned. SBA cannot waive noncompliance with the requirement for notification of a borrower's default within 30 days in order to demand that SBA purchase a guaranteed loan since the requirement is a material element in the contractual relationship between SBA and the lending institution. SBA lacks authority to purchase such guaranteed loans in the case of noncompliance with the 30-day notice requirement.