SBA Form 750B, Loan Guaranty Agreement for Short-Term Loans
What Is SBA Form 750B?
SBA Form 750B, Loan Guaranty Agreement for Short-Term Loans is a document signed by the lender and the Small Business Administration (SBA) to guarantee "short-term loans" (loans with maturities of 12 months or less). This agreement covers only loans duly approved for a guaranty by the lender and the SBA subject.
The latest version of the form was released by the SBA in March 1980 with all previous editions obsolete. An up-to-date SBA Form 750B fillable version is available for digital filing and download below:
The 7(a) loan program is a multisectoral business loan program implemented as a “deferred participation” program. The lender initiates the loan for small business and if the SBA agrees to guarantee the loan, the lender funds and services the loan. If the loan goes into default, the lender conducts the liquidation or workout efforts and the lender and the SBA share in the loss, if any, in accordance with the percentage guaranteed by the SBA.
A 7(a) loan can be used for several business purposes, including real estate or equipment purchases, working capital or inventory, and expansion. The money can be paid back over 10 years for working capital and 25 years for real estate. The interest rates are a maximum of 2.75% if stretched over seven years.
SBA Form 750, Lender’s Loan Guaranty Agreement (Deferred Participation) is used for the same purpose, but for the loans with maturity more than 12 months.
SBA Loan Guarantee Agreement
The loan guaranty agreement outlines a basic framework for the duties and responsibilities of the lender and the SBA in the process of making, closing, and administering any individual SBA-guaranteed loan. This agreement must comply with SBA’s rules and regulations, as amended from time to time.
Most businesses are eligible for financial assistance from the SBA. They must operate for profit, be engaged in the U.S. or its territories, have reasonable owner equity to invest, and use alternative financial resources, including personal assets, before seeking financial assistance.
The lender is responsible for knowing how to properly close loans, secure collateral, obtain and perfect the required lien positions, and meet other authorization requirements. The lender has to meet the loan requirements in the loan authorization and submit the necessary documentation to realize a guaranty. This documentation includes:
- Demand letter to the SBA on SBA’s preformatted form;
- Evidence of eligibility;
- All mandatory legal documentation;
- A settlement sheet;
- A certified transcript of the account;
- Reconciliation of the business personal property collateral documentation;
- Verification of collateral disposition;
- Wire transfer instructions and any other required documentation.
The parties have to agree on the application and approval of guaranty, on closing and disbursement of loans, report of status, guaranty fee, administration of loans, purchase by the SBA, fees or commissions, sharing of repayment proceeds and collateral, payment of expenses, SBA purchase privilege, assignment of the interest in the loan, and on its termination.