SBA lending, in plain English
The acronyms and terms of government-guaranteed small-business lending, each with what it actually means. Written for lenders, borrowers, and anyone trying to make sense of a 7(a) file.
The program
SBA
Small Business Administration
The federal agency that guarantees small-business loans so banks are willing to make them.
7(a)
Section 7(a) loan program
The SBA's main loan program, named after a section of the law. Loans up to $5 million, guaranteed 75-85% by the government.
7(a) Small
7(a) Small loan
A 7(a) loan of $350,000 or less, with a streamlined underwriting path.
504
Section 504 loan program
An SBA program for real estate and major equipment, run through CDCs.
CDC
Certified Development Company
A nonprofit that administers SBA 504 loans.
SBA Express
—
A faster 7(a) variant up to $500K with only a 50% guarantee; lenders mostly use their own forms.
SOP 50 10
Standard Operating Procedure 50 10
The SBA's rulebook for making loans. The current version is SOP 50 10 8, effective June 2025. A 7(a) file must comply with it or the guarantee is at risk.
The players
LSP
Lender Service Provider
A third party that does a bank's SBA loan paperwork under a written agreement reviewed by the SBA. The bank pays the fee, never the borrower. This is what Sevanae is.
PLP
Preferred Lenders Program
Delegated authority: the lender approves SBA loans in-house without sending each file to the SBA first.
LGPC
Loan Guaranty Processing Center
The SBA center that reviews loan applications from non-delegated lenders.
CDFI
Community Development Financial Institution
A mission-driven lender serving underserved communities.
CU
Credit Union
A member-owned lender; many participate in SBA lending.
NAGGL
National Association of Government Guaranteed Lenders
The trade association of SBA lenders.
The file
Packaging
—
Assembling the complete, rule-compliant loan file: eligibility, financial analysis, forms, and exhibits. What lenders pay $2,000-4,000 per file for today.
Spreading
Financial spreading
Extracting the numbers from tax returns and financial statements into a standardized analysis of the business.
DSCR
Debt Service Coverage Ratio
Whether the business earns enough to cover its loan payments. Cash flow divided by debt payments; lenders generally want at least 1.15x.
Credit elsewhere
—
The required test that the borrower cannot get reasonable credit without the guarantee; the lender must document why.
Equity injection
—
The borrower's own money in the deal. Startups and business purchases need at least 10% down under current rules.
Standby agreement
—
A creditor's promise not to collect. A seller's note only counts toward equity injection if it is on full standby for the whole loan term.
Form 1919
SBA Form 1919
The borrower information form: ownership, history, and eligibility questions.
Form 413
SBA Form 413
The personal financial statement each 20%+ owner provides. Must be current.
Form 159
SBA Form 159
The fee disclosure form for agents and packagers paid in connection with a loan.
4506-C
IRS Form 4506-C
The borrower's authorization for the lender to pull IRS transcripts and verify tax returns are real.
SBSS
Small Business Scoring Service
The SBA's old small-loan credit score. Retired March 1, 2026 for 7(a) Small loans; lenders now document their own credit analysis.
E-Tran
—
The SBA's electronic system where loans are submitted and receive their loan numbers.
After closing
Guaranty purchase
—
When a loan defaults and the lender asks the SBA to pay the guaranteed share. The SBA audits the file before paying.
Repair / denial
—
The SBA reducing (repair) or refusing (denial) the guarantee payout because the file broke the rules. The outcome packaging exists to prevent.
Secondary market
—
Lenders can sell the guaranteed portion of a 7(a) loan at a premium for immediate income.
1502 report
—
The monthly status report lenders file on their SBA loan portfolio.
SOP 50 57
—
The SBA's rulebook for servicing and liquidating loans after they close.
* Plain-language summaries, not legal advice. Where they differ from the official rules (SBA SOP 50 10 and 13 CFR), the official rules win.