SBA SOP 50 10 8.1, App3 — Definitions

SOP 50 10 8.1 App3

Effective 2026-10-01 · publisher's stamp for this provision

Appendix 3: Definitions 7(a) Loans: (13 CFR § 120.420(a) 7(a)) All references to 7(a) loans under this section include loans made under section 7(a) of the Small Business Act (15 U.S.C. 631 et seq.). 7(a) Small Loans: Are 7(a) Loans that are loans of $350,000 or less. 7(a) Small Loans exclude: Standard 7(a) loans, SBA Express, Export Express, CAPLines, Export Working Capital Program (EWCP), and Pilot Program loans. Agent: (13 CFR § 103.1(a) 7(a) and 504) An authorized representative, including an attorney, accountant, consultant, packager, Lender Service Provider, or any other person representing an applicant or participant by conducting business with SBA. Applicant: (13 CFR § 103.1 7(a) and 504) Any person, firm, concern, corporation, partnership, cooperative or other business enterprise applying for any type of assistance from SBA. Area of Operations: (13 CFR § 120.802 504) The geographic area where SBA has approved a CDC’s request to provide 504 Loan Program services to small businesses on a permanent basis. The minimum Area of Operations is the State in which the CDC is incorporated. Associate: (13 CFR § 120.10 7(a) and 504) 1. An Associate of a Lender or CDC is: a. An officer, director, Key Employee, or holder of 20 percent or more of the value of the Lender’s or CDC’s stock or debt instruments, or an Agent (as defined above) involved in the loan process; b. Any entity in which one or more individuals referred to in paragraphs (1)(a) of this definition or a Close Relative of any such individual owns or controls at least 20 percent; 2. An Associate of a small business is: a. An officer, director, owner of more than 20 percent of the equity, or Key Employee of the small business; b. Any entity in which one or more individuals referred to in paragraphs (2)(a) of this definition owns or controls at least 20 percent; and c. Any individual or entity in control of or controlled by the small business (except a Small Business Investment Company (SBIC) licensed by SBA). 3. For purposes of this definition, the time during which an Associate relationship exists commences six months before the following dates and continues as long as the certification, participation agreement, or loan is outstanding: a. For a CDC, the date of certification by SBA; b. For a Lender, the date of application for a loan guarantee on behalf of an applicant; or c. For a small business, the date of the loan application to SBA, the CDC, the Intermediary, or the Lender. Borrower: (13 CFR § 120.10 7(a) and 504) The obligor of an SBA business loan. Business Purchase Price: In a change of ownership transaction, the price set by the purchase and sales agreement, less the portion of owner-occupied commercial real estate assets being acquired in the transaction. The portion of the owner-occupied commercial real estate is established by the appraised value. Central Servicing Agent (CSA): (13 CFR § 120.802 504) An entity that receives and disburses funds among the various parties involved in 504 financing under a master servicing agent agreement with SBA. Certificate: 1. (13 CFR § 120.600 7(a) Loan Program Only) The document the FTA issues representing either a beneficial fractional undivided interest in a Pool (Pool Certificate), or a fractional undivided interest in some or all of the guaranteed portion of an individual 7(a) guaranteed loan (Individual Certificate). 2. (13 CFR § 120.802 504 Loan Program Only) A document issued by SBA or its agent representing ownership of all or part of a Debenture Pool. Certified Development Company (“CDC”): (13 CFR § 120.10 7(a) and 504) An entity authorized by SBA to deliver 504 financing to small businesses. Close Relative: (13 CFR § 120.10 7(a) and 504) A spouse; a parent; or a child or sibling, or the spouse of any such person. Community Advantage Small Business Lending Company (CA SBLC): (13 CFR § 120.10 7(a)) A type of SBLC that is a nonprofit lending institution licensed and authorized by SBA to make loans pursuant to section 7(a) of the Small Business Act. Note: This includes former Community Advantage Pilot Lenders that were grandfathered in at the time Community Advantage SBLC licenses were authorized regardless of their profit or nonprofit status. Conduct Business with SBA (13 CFR § 103.2(a)) means: 1. Preparing or submitting on behalf of an applicant an application for financial assistance of any kind, assistance from the Investment Division of SBA, or assistance in procurement and technical matters; 2. Preparing or processing on behalf of a lender or a participant in any of SBA’s programs an application for Federal financial assistance; 3. Participating with or communicating in any way with officers or employees of SBA on an applicant’s, participant’s, or lender’s behalf; 4. Acting as a Lender Service Provider; and 5. Such other activity as SBA reasonably shall determine. Current: (13 CFR § 120.600 7(a)) No repayment from a Borrower to a Lender is over 29 days late measured from the due date of the payment on the records of the FTA’s central registry (Pools) or the entity servicing the loan (individual guaranteed portion). Debenture: (13 CFR § 120.802 504) An obligation issued by a CDC and guaranteed 100 percent by SBA, the proceeds of which are used to fund a 504 loan. Debenture Pool: (13 CFR § 120.802 504) An aggregation of Debentures. Designated Attorney: (13 CFR § 120.802 504) The CDC closing attorney that SBA has approved to close loans under an expedited closing process for a Priority CDC. Domestic-to-Foreign Export: (7(a)) A transaction in which the Borrower sells to a foreign buyer. This definition also includes digital, service, and other intangible transactions in which no physical goods are being shipped. Eligible Passive Company: (13 CFR § 120.10 7(a) and 504) A small entity or trust which does not engage in regular and continuous business activity, which leases real or personal property to an Operating Company for use in the Operating Company’s business, and which complies with the conditions set forth in §120.111. Export Finance Manager: (7(a)) This is the current term for the SBA employee who works at the United States Export Assistance Center. Export Transaction: (7(a)) The production and payment associated with a sale of goods or services to a foreign buyer. Eligible transactions include Domestic-to-Foreign Exports, Foreign-to-Foreign Exports, and Indirect Exports. Exporter: (7(a)) A small business concern engaged in or proposing to engage in an eligible Export Transaction. Foreign-to-Foreign Export: (7(a)) A transaction in which the Borrower sells to a foreign buyer, but the goods do not leave a United States port of export. In Foreign-to-Foreign Export transactions, related inventory is ineligible. FTA: (13 CFR § 120.600 7(a)) SBA’s fiscal and transfer agent. Good Standing: (13 CFR § 120.420 7(a)) In general, a Lender is in “good standing” with SBA if it: 1. Is in compliance with all applicable: a. Laws and regulations; b. Policies; and c. Procedures; 2. Is in good financial condition as determined by SBA; 3. Is not under investigation or indictment for, or has not been convicted of, or had a judgment entered against it for felony or fraud, or charges relating to a breach of trust or violation of a law or regulation protecting the integrity of business transactions or relationships, unless the Lender Oversight Committee has determined that good standing exists despite the existence of such factors. 4. Does not have any officer or employee who has been under investigation or indictment for, or has been convicted of or had a judgment entered against him for, a felony or fraud, or charges relating to a breach of trust or violation of a law or regulation protecting the integrity of business transactions or relationships, unless the Lender Oversight Committee has determined that good standing exists despite the existence of such person. Gross Debenture: (504) Net Debenture Proceeds plus the eligible administrative costs. Household member: (13 CFR § 105.201 7(a) and 504) Spouse and minor children of an employee, all blood relations of the employee and any spouse who resides in the same place of abode with the employee. In Margin: when loan availability established per loan program requirements is equal to or greater than the principal balance. Indirect Export: (7(a) and 504) The term “indirect export” applies to situations where, although the Borrower’s direct customer is located in the United States, that customer will be exporting the items/services it purchased from the Borrower to a foreign Buyer. In such cases, the Borrower must provide documentation to the Lender from the Borrower’s domestic customer (typically in the form of a letter, invoice, order, or contract) that the goods or services are in fact being exported. Ineligible Person: An Ineligible Person includes, but is not limited to: 1. Undocumented aliens who are in the U.S. illegally; 2. An individual granted asylum, a refugee, a visa holder, a non-immigrant alien under 8 U.S.C. § 1101(a)(15), or those under Deferred Action for Childhood Arrivals (DACA); 3. An individual, including a visa holder, who is not a U.S. Citizen, or U.S. National (non-resident aliens); 4. An individual (including U.S. Citizens and U.S. Nationals) who has their Principal Residence outside of the United States, its territories, or possessions; 5. A business concern or entity that was created, organized, or incorporated outside of the United States, its territories, or possessions; 6. An individual who is a citizen of the People’s Republic of China, or the Special Administrative Region of Hong Kong; 7. A Lawful Permanent Resident (LPRs) (commonly referred to as “green card holders”), including individuals with permanent (Unconditional) LPR status, and Conditional LPR status; 8. An individual, business concern, or entity on the Office of Foreign Assets Control (OFAC) sanctions list. See Paragraph J of this Chapter. Initial Currency Rate: (13 CFR § 120.420 7(a)) The Initial Currency Rate Percentage (ICRP) measures the relationship between a securitizer’s Initial Currency Rate and the SBA 7(a) loan portfolio Currency Rate at the time of the first securitization after April 12, 1999. The ICRP is calculated by dividing the securitizer’s Currency Rate by the SBA 7(a) loan portfolio Currency Rate. SBA will calculate the securitizer’s ICRP as of the end of the calendar quarter immediately prior to the first securitization completed after April 12, 1999. Interim Financing: (504) is any disbursement of funds (other than the Borrower’s contribution) to finance eligible project costs after the loan is approved by SBA but before the debenture is sold. Investor: (13 CFR § 120.802 504) An owner of a beneficial interest in a Debenture pool. Job Created: (504) A full-time equivalent (8 productive hours per day/40 productive hours per week) permanent or contracted employment created within 2 years of financing. The Government Accountability Office’s (GAO) methodology for calculating full-time equivalent employees demonstrates how to convert part-time or temporary jobs into “full-time equivalent” (FTE) jobs: Cumulative Hours Worked / Cumulative Hours Worked in a Full-Time Schedule = FTE For example: Assume that a full-time schedule for the 52-week work-year is 2,080 hours/year. An employee that works part-time 15 hours per week would qualify as 0.375 FTEs. (15 hours X 52 weeks) / 2080 hours = 0.375 Job Opportunity: (13 CFR § 120.802 504) A full time (or equivalent) permanent job created within two years of receipt of 504 funds, or retained in the community because of a 504 loan. Job Retained: (504) A job that otherwise would be lost to the community if the project was not done. An existing job should not be counted as a “Job Retained” unless the job is at risk of being lost if the project is not done. The CDC must be able to reasonably show that the job would be lost to the community if the project was not done. Key Employee (of a loan applicant/Borrower): A person employed by the business who has the experience, qualifications, or required license to run the business, or who manages the business’s day to day for owner(s), including making decisions about hiring and firing employees, handling payroll, and managing the business’s finances. Key Employee (of an SBA Lender): Senior Managers, members of loan committees, and any Person (as defined in 13 CFR § 120.10) hired by the lender who has a meaningful participation in the direction of the operations, policies, or financial decisions of the lender. Lead District Office: 1. For the 7(a) Loan Program: The SBA district office or branch office serving the geographic area where the Lender’s principal office is located; and 2. For the 504 Loan Program: The Lead SBA Office as defined in 13 CFR § 120.802: “The SBA District Office designated by SBA as the primary liaison between SBA and a CDC and with responsibility for managing SBA’s relationship with that CDC.” Search SBA District Offices here Lender or 7(a) Lender: (13 CFR § 120.10 7(a)) An institution that has executed a participation agreement with SBA under the guaranteed loan program. Lender Oversight Committee (LOC): (13 CFR § 120.10 7(a) and 504) A committee established within SBA by legislation, which meets at least quarterly, and which has the membership and duties set forth in § 48 of the Small Business Act as further outlined in delegations of authority published in the Federal Register. The LOC’s duties include, but are not limited to, reviewing (in an advisory capacity) any lender oversight, portfolio risk management, or program integrity matters brought by the D/OCRM, and voting on formal enforcement act recommendations. Lender Service Provider: (13 CFR § 103.1(d)) An Agent who carries out lender functions in originating, disbursing, servicing, or liquidating a specific SBA business loan or loan portfolio for compensation from the lender. SBA determines whether or not one is a “Lender Service Provider” on a loan-by-loan basis. Limited or Special Purpose Property: A limited-market property with a unique physical design, special construction materials, or a layout that restricts its utility to the use for which it was built. Loan Instruments: (13 CFR § 120.10 7(a) and 504) The note, instruments of hypothecation, and all other agreements and documents related to a loan. Loan Program Requirements: (13 CFR § 120.10 7(a) and 504) Requirements imposed upon Lenders, CDCs, or Intermediaries by statute; SBA and applicable government-wide regulations; any agreement the Lender, CDC, or Intermediary has executed with SBA; SBA SOPs; Federal Register notices; official SBA notices and forms applicable to the 7(a) Loan Program, 504 Loan Program, or Microloan Program; and the SBA Terms and Conditions, as such requirements are issued and revised by SBA from time to time. For CDCs, this term also includes requirements imposed by Debentures, as that term is defined in 13 CFR § 120.802. For Intermediaries, this term also includes requirements imposed by promissory notes, collateral documents, and grant agreements. Local Economic Area: (13 CFR § 120.802 504) An area, as determined by SBA, that is in a State other than the State in which an existing CDC (or an applicant applying to become a CDC) is incorporated, is contiguous to the CDC’s existing Area of Operations (or the applicant’s proposed Area of Operations) of its State of incorporation, and is a part of a local trade area that is contiguous to the CDC’s Area of Operations (or applicant’s proposed Area of Operations) of its State of incorporation. Examples of a local trade area would be a city that is bisected by a State line or a metropolitan statistical area that is bisected by a State line. Management Official: (13 CFR § 120.10 7(a)) An officer, director, general partner, manager, employee participating in management, agent or other participant in the management of the affairs of the SBA Supervised Lender’s activities under the 7(a) program. Multi-State CDC: (13 CFR § 120.802 504) A CDC that is incorporated in one State and is authorized by SBA to operate as a CDC in a State contiguous to its State of incorporation beyond any contiguous Local Economic Areas. Net Book Value: (7(a) and 504) An asset’s original price minus depreciation and amortization. Net Debenture Proceeds: (13 CFR § 120.802 504) The portion of Debenture proceeds that finance eligible Project costs (excluding administrative costs). Net Rate: (13 CFR § 120.600 7(a)) The interest rate on an individual guaranteed portion of a loan in a Pool. New Business: (7(a) and 504) A business that has been in operation for 2 years or less at the time the loan is approved. A business that has been in operation for more than 2 years at the time the loan is approved may be considered a New Business if it is a change of ownership that will result in new, unproven ownership/management and increased debt unrelated to business operations. If there is a change of ownership, the CDC must review the management and level of debt in order to decide whether an additional Borrower’s contribution of 5% is necessary. Operations are deemed to begin when the business begins generating revenue from its intended operations. When an existing business starts a business that is in the same 3-digit NAICS code with identical ownership, and they are Co-Borrowers, SBA considers this to be a business expansion and not a new business. Nondepository Institution: (13 CFR § 120.420 7(a)) A “nondepository institution” is a Small Business Lending Company (“SBLC”) regulated by SBA or a Business and Industrial Development Company (“BIDCO”) or other nondepository institution participating in SBA’s 7(a) program. Non-controlling Minority Equity Investments: To be considered as eligible equity, the investment may not be subject to any agreement to repay or make distributions to recover the investment prior to release of the SBA guaranty. To qualify as a Non-controlling Minority Equity Investors, the investor must have less than 20% equity in and exert no control over the operating business. The Lender must also review and document the terms of all equity investments, including provisions that are realized upon the sale of the business, in their credit memorandum. When Equity Investments are used to meet the equity injection requirements, distributions to the investor that are not made solely for the purpose of satisfying the investor’s tax obligations attributable to the business’s income are prohibited until the 7(a) loan has been paid off. Additional Equity Investments that are not used to meet the equity injection requirements, such as those providing additional liquidity, may receive standard distributions subject to any agreements of the Lender. The Lender may include covenants, such as DSC, in the loan agreement to ensure that the business has sufficient cash flow to make distributions beyond tax purposes. Non-Federally Regulated Lender (NFRL): (13 CFR § 120.10 7(a)) A business concern that is authorized by the SBA to make loans under section 7(a) and is subject to regulation by a state but whose lending activities are not regulated by a Federal Financial Institution Regulator. Note Rate: (13 CFR § 120.600 7(a)) The interest rate on the Borrower’s note. Operating Company: (13 CFR § 120.10 7(a) and 504) An eligible small business actively involved in conducting business operations now or about to be located on real property owned by an Eligible Passive Company, or using or about to use in its business operations personal property owned by an Eligible Passive Company. Other Regulated SBLC: (13 CFR § 120.10 7(a)) A Small Business Lending Company whose SBA operations receive regular safety and soundness examinations by a state banking regulator or a Federal Financial Institution Regulator, and which meets the requirements set forth in 13 CFR § 120.1511. Packager: (13 CFR § 103.1(e)) An Agent who is employed and compensated by an Applicant or lender to prepare the Applicant’s application for financial assistance from SBA. SBA determines whether or not one is a “Packager” on a loan-by-loan basis. Participant: (13 CFR § 103.1 7(a) and 504) A person or entity that is participating in any of the financial, investment, or business development programs authorized by the Small Business Act or Small Business Investment Act of 1958. Person: 1. (13 CFR § 120.10 applicable for 7(a) and 504 business loans) Any individual, corporation, partnership, association, unit of government, or legal entity, however organized. 2. (13 CFR § 105.201 applicable for 7(a) and 504 Standards of Conduct and Employee Restrictions and Responsibilities) An individual, a corporation, a company, an association, a firm, a partnership, a society, a joint stock company, or any other organization or institution. Pool: (13 CFR § 120.600 7(a)) An aggregation of SBA-guaranteed portions of loans made by Lenders. Pool Assembler: (13 CFR § 120.600 7(a)) A financial institution that: 1. Organizes and packages a Pool by acquiring the SBA-guaranteed portions of loans from Lenders; 2. Resells fractional interests in the Pool to Registered Holders; and 3. Directs the FTA to issue Certificates. Pool Rate: (13 CFR § 120.600 7(a)) The interest rate on a Pool Certificate. Preference: (13 CFR § 120.10 7(a) and 504) Any arrangement giving a Lender or a CDC a preferred position compared to SBA relating to the making, servicing, or liquidation of a business loan with respect to such things as repayment, collateral, guarantees, control, maintenance of a compensating balance, purchase of a Certificate of deposit or acceptance of a separate or companion loan, without SBA’s consent. Principal Residence: Principal Residence is defined by IRS Publication 523. Priority CDC: (13 CFR § 120.802 504) A CDC certified to participate on a permanent basis in the 504 Loan Program (see §120.812) that SBA has approved to participate in an expedited 504 loan and Debenture closing process. Project: (13 CFR § 120.802 504) The purchase or lease, and/or improvement or renovation of one or more long-term fixed assets by a small business, with 504 financing, for use in its business operations. Borrowers may finance multiple Projects simultaneously using separate 504 loans, subject to 504 Debenture limits. Note: This SOP uses the term Project for 7(a) also. Project Property: (13 CFR § 120.802 504) One or more long-term fixed assets, such as land, buildings, machinery, and equipment, that are acquired or improved by a small business with a 504 transaction and for use in its business operations. Qualified Source: (With respect to business valuations) 7(a): A “qualified source” is an individual who regularly receives compensation for business valuations and is accredited by one of the following recognized organizations and is independent of the loan production function, not involved in the approval of the transaction, and must not have the appearance of a conflict of interest: 1. Accredited Senior Appraiser (ASA) accredited through the American Society of Appraisers; 2. Certified Business Appraiser (CBA) accredited through the Institute of Business Appraisers; 3. Accredited in Business Valuation (ABV) accredited through the American Institute of Certified Public Accountants; 4. Certified Valuation Analyst (CVA) accredited through the National Association of Certified Valuation Analysts; and 5. Business Certified Appraiser (BCA) accredited through the International Society of Business Appraisers. Quality of Earnings (QoE): A QoE analysis is an independent financial due diligence report that examines the reliability, sustainability, and accuracy of a business's historical and projected earnings. The QoE must be performed by an independent qualified financial professional and must be conducted for the benefit of the Lender. QoE must include a Cash Proof. For purposes of this requirement, a Cash Proof is a financial analysis that independently reconstructs cash receipts and disbursements by reconciling bank statement data to the income statement and tax return for each period under review. Referral Agent: (13 CFR § 103.1(f)) A person or entity who identifies and refers an Applicant to a lender or a lender to an Applicant. The Referral Agent may be employed and compensated by either an Applicant or a lender. Registered Holder: (13 CFR § 120.600 7(a)) The Certificate owner listed in FTA’s records. Rentable Property: (13 CFR § 120.10 7(a) and 504) The total square footage of all buildings or facilities used for business operations. Risk Rating: (13 CFR § 120.10 7(a) and 504) An SBA internal composite rating assigned to individual SBA Lenders or Intermediaries that reflects the risk associated with the SBA Lender's or Intermediary's portfolio of SBA Loans. Risk Ratings currently range from one to five, with one representing the least risk and five representing the most risk and may be revised by SBA from time to time as published in the Federal Register through notice and comment. Rural Area: 7(a) and 504: An area located in a county that the US Census Bureau has defined as at least 30 percent rural. The Census Bureau’s urban-rural classification and the Census Bureau’s County-level Urban and Rural Information can be found here: Urban and Rural (census.gov). Sales-Based Repayment Agreement: A business funding agreement where a business receives a cash advance in exchange for a percentage of its future sales. (e.g. Point-of-Sale or Merchant Cash Advance (MCA)). SBA Assistance: (13 CFR § 105.201 7(a) and 504) Financial, contractual, grant, managerial or other aid, including size determinations, section 8(a) participation, licensing, certification, and other eligibility determinations made by SBA. The term also includes an express decision to compromise or defer possible litigation or other adverse action. SBA Lender: (13 CFR § 120.10 7(a) and 504) A 7(a) Lender or a CDC. This term includes SBA Supervised Lenders. SBA Loan: The full amount of the 7(a) loan or the Gross Debenture amount of the 504 loan. SBA Loan System: All current and future SBA designated electronic loan systems (electronic transmission). References to the "SBA Loan System" in this SOP shall be deemed to include those systems without need for further amendment if system names change. SBA Region: SBA divides the United States and its territories into 10 regions numbered 1-10. SBA Regional Offices support SBA District Offices and promote economic development growth and competitiveness within their geographic areas. SBA Supervised Lender: (13 CFR § 120.10 7(a)) A 7(a) Lender that is either a Small Business Lending Company or a NFRL. SBA’s Secondary Market Program Guide: (13 CFR § 120.600 7(a)) An issuance from SBA which describes the characteristics of Secondary Market transactions. SBA Terms and Conditions: The digital loan guaranty authorization request by the Lender to SBA to authorize the Lender to make the loan with an SBA guaranty under the terms and conditions submitted in the SBA Loan System. Securitization: (13 CFR § 120.420 7(a)) A “securitization” is the pooling and sale of the unguaranteed portion of SBA-guaranteed loans to a trust, special purpose vehicle, or other mechanism, and the issuance of securities backed by those loans to investors in either a private placement or public offering. Service Provider: (13 CFR § 120.10 7(a) and 504) An entity that contracts with a Lender or CDC to perform management, marketing, legal or other services. Small Business Lending Company (SBLC): (13 CFR § 120.10 7(a)) A nondepository lending institution that is SBA licensed and is authorized by SBA to make loans pursuant to section 7(a) of the Small Business Act and loans to Intermediaries in SBA's Microloan program. SBA accepts applications for SBLCs from time to time as published in the Federal Register. SOP: (13 CFR § 120.10 7(a) and 504) SBA Standard Operating Procedures, as issued and revised by SBA from time to time. SOPs are publicly available on SBA's Web site at www.sba.gov/document/. Special Geographic Areas: (504) include Alaska, Hawaii, State-designated Enterprise Zones, Empowerment Zones, Enterprise Communities, Opportunity Zones, and Labor Surplus Areas. (An “Opportunity Zone” is an economically distressed community that has been nominated by the State and certified by the Secretary of the U.S. Treasury as a community in which new investments, under certain conditions, may be eligible for preferential tax treatment.) Special Government Employee: (13 CFR § 105.201 7(a) and 504) means an officer or employee of SBA, who is retained, appointed or employed to perform temporary duties on a full-time or intermittent basis, with or without compensation, for not to exceed 130 days during any period of 365 consecutive days. Standard 7(a) Loans: Are 7(a) Loans that are greater than $350,000. Standard 7(a) Loans exclude: 7(a) Small, SBA Express, Export Express, CAPLines, Export Working Capital Program (EWCP), International Trade loans, and Pilot Program loans. Start-Up Business: (7(a)) a business is a Start-Up Business if it has been in operation (i.e., generating revenue from intended operations) for 1 year or less; Supplemental Guarantor: (7(a)) A person or entity that a Lender requires to provide a guaranty out of an abundance of caution and that is not otherwise required by SBA Loan Program Requirements to provide a guaranty. A non-owner spouse who is required to provide a limited guaranty in order to secure a lien on jointly owned personal real estate is not a Supplemental Guarantor, because in this case the guaranty is mandatory. Third Party Lender: (504) usually a financial institution that provides the Third Party Loan and typically has a first lien on the project collateral. SBA does not permit the CDC to be the Third Party Lender on Projects financed by the CDC. Third Party Loan: (13 CFR § 120.802 504) A loan from a commercial or private lender, investor, or Federal (non-SBA), State or local government source that is part of the Project financing. Underwriter: (13 CFR § 120.802 504) An entity approved by SBA to form Debenture Pools and arrange for the sale of Certificates Veteran: (7(a) and 504) (Title 38, Section 101(2), (10), & (18) 7(a) and 504): A person who served in the active military, naval, or air service (i.e., the United States Army, Navy, Marine Corps, Air Force, and Coast Guard, including the reserve components thereof), and who was discharged or released therefrom under conditions other than dishonorable. The term “discharge or release” includes (A) retirement from the active military, naval, or air service, and (B) the satisfactory completion of the period of active military, naval, or air service for which a person was obligated at the time of entry into such service, or, in the case of a person who, due to enlistment or reenlistment, was not awarded a discharge or release from such period of service at the time of such completion thereof and who, at such time, would otherwise have been eligible for the award of a discharge or release under conditions other than dishonorable. Further, section 3(q) of the Small Business Act defines “owned and controlled by a veteran” as a business in which one or more veterans own at least 51 percent of the business, or, in the case of a corporation, at least 51 percent of the stock, and in which one or more veterans also control the management and daily business operations.

Source: SBA SOP 50 10 8.1, App3 — Definitions · source URL · snapshot 0fb0c4692cf52938