13 C.F.R. § 120.2

Descriptions of the business loan programs

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(a) 7(a) loans. (1) 7(a) loans provide financing for general business purposes and may be:

(i) A direct loan by SBA;

(ii) An immediate participation loan by a Lender and SBA; or

(iii) A guaranteed loan (deferred participation) by which SBA guarantees a portion of a loan made by a Lender.

(2) A guaranteed loan is initiated by a Lender agreeing to make an SBA guaranteed loan to a small business and applying to SBA for SBA's guarantee under a blanket guarantee agreement (participation agreement) between SBA and the Lender. If SBA agrees to guarantee (authorizes) a portion of the loan, the Lender funds and services the loan. If the small business defaults on the loan, SBA's guarantee requires SBA to purchase its portion of the outstanding balance, upon demand by the Lender and subject to specific conditions. Regulations specific to 7(a) loans are found in subpart B of this part.

(b) Microloans. SBA makes loans and loan guarantees to non-profit Intermediaries that make short-term loans up to $50,000 to eligible small businesses for general business purposes, except payment of personal debts. SBA also makes grants to Intermediaries for use in providing management assistance and counseling to small businesses. Regulations specific to these loans are found in subpart G of this part.

(c) 504 loans. Projects involving 504 loans require long-term fixed-asset financing for small businesses. A Certified Development Company (CDC) provides the final portion of this financing with a 504 loan made from the proceeds of a Debenture issued by the CDC, guaranteed 100 percent by SBA (with the full faith and credit of the United States), and sold to investors. The regulations specific to these loans are found in subpart H of this part.

[61 FR 3235, Jan. 31, 1996, as amended at 76 FR 63545, Oct. 12, 2011]

Notes of Decisions

Cited in 18 cases (6 in the last 5 years), 1975–2025 · leading case: United States v. Kimbell Foods, Inc.

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United States v. Kimbell Foods, Inc. (1979) scotus · cites it 3× “§ 636 (a) (7); see 13 CFR §120.2 (c)(1) (1978). The FHA operates under a similar restriction.”

California Pacific Bank, a California Banking Corporation v. Small Business Administration, an Agency of the United Stat (1977) ca9 · cites it 3× “” 13 C.F.R. § 120.2 (b)(3) (1977). Congress intended this joint liability scheme to further the statutory purpose of encouraging banks to make loans to small businesses, while providing an incentive for the banks to make and manage these loans in accordance with their normal…”

Minnwest Bank Central v. Flagship Properties LLC (2004) minnctapp “See generally 13 C.F.R. § 120.2 (c) (2004) (requiring that a "certified development company” provide final portion of long-term financing with 504 loan made from debenture proceeds and guarantied by the SBA).”

Mission Trace Investments, Ltd. v. Small Business Administration (1985) cod · cites it 4× “The complaint alleged that the SBA wrongfully had denied Mission’s application for a loan guarantee, and asserted two primary grounds for relief: (1) that promissory estoppel precluded the SBA from denying the loan application, and (2) that an SBA regulation known as the…”

Craig-Buff Ltd. Partnership v. United States (2006) uscfc · cites it 2× “” 13 C.F.R. § 120.2 (c). . Section 7(a) loans provide financing for general business purposes and may be either: (i) a direct loan by SBA; (ii) an immediate participation loan by a lender and SBA; or (iii) a guaranteed (deferred participation) by which SBA guarantees a portion…”

A & S Council Oil Co., Inc. v. Saiki (1992) dcd · cites it 2× “SBA denied the loan application for the sole reason that the Theatre qualified as an “opinion molder” and was therefore ineligible for a loan guaranty under 13 C.F.R. § 120.2 (d)(4). 7 8 *1229 On appeal, in Ascot, three different arguments concerning sovereign immunity were…”

Raitport v. Chase Manhattan Capital Corp. (1975) nysd · cites it 2× “1 (a) (1974); the loans may not be in excess of the statutory proscriptions, nor may they be for the purpose of paying off creditors, 13 C.F.R. § 120.2 (d)(1)(i) (1974). In addition, there must be an assurance of repayment, 13 C.”

Palmer v. Weaver (1981) paed “Defendants rely on regulations at 13 C.F.R. § 120.2 (c)(1) 1978 as to. Business Loan Policy.”

Ascot Dinner Theatre, Ltd. v. Small Business Administration (1989) ca10 · cites it 3× “SBA has stipulated that 13 C.F.R. § 120.2 (d)(4), et seq. (1983), the “opinion molder rule” in effect at the time of Ascot’s application, was the sole basis for denying Ascot’s application and that absent the regulation, Ascot would have qualified for an SBA loan guaranty.”

Rooster's Grill, Inc. v. Peoples Bank (2013) mssd · cites it 2× “See 13 C.F.R. § 120.2 (a). 3 The SBA guarantee program is designed to provide protection for lenders and thereby encourage private lending to small businesses.”

Wp Company LLC v. U.S. Small Business Administration (2020) dcd “§ 636 (a); 13 C.F.R. § 120.2 (a). The PPP temporarily expanded the types of entities to which SBA could make covered loans to include non-profit 3 organizations, independent contractors, and self-employed individuals, and it permitted SBA to guarantee all such loans.”

Rubie's, LLC v. First American Title Company (2020) caed “” 13 C.F.R. § 120.2 . 1 requests to Wells Fargo, as the servicer of the SBA Loan and agent for the SBA, for a demand to 2 pay off the SBA Loan secured by the SBA Deed of Trust.”

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— 13 C.F.R. § 120.2(d)(4)(1985) — 1 case

Mission Trace Investments, Ltd. v. Small Business Administration (1985) cod “The complaint alleged that the SBA wrongfully had denied Mission’s application for a loan guarantee, and asserted two primary grounds for relief: (1) that promissory estoppel precluded the SBA from denying the loan application, and (2) that an SBA regulation known as the…”

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