SBA SOP 50 10 8, App3 — DEFINITIONS
Verbatim text of SBA SOP 50 10 8 section App3 (DEFINITIONS), effective 2025-06-01. 4 provision(s) quoted from the SOP PDF. SBA's own document page serves superseded editions, and the SOP is further amended by policy notices — read this with the notices that touch it.
Verbatim regulatory text
Verbatim provisions from SBA SOP 50 10 8, App3 — DEFINITIONS — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
SOP 50 10 8 App3
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: 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; 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: An officer, director, owner of more than 20 percent of the equity, or Key Employee of the small business; 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 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: For a CDC, the date of certification by SBA; For a Lender, the date of application for a loan guarantee on behalf of an applicant; or Appendix 3: Definitions 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. 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:
SOP 50 10 8 App3.1
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).
SOP 50 10 8 App3.1.2
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;
SOP 50 10 8 App3.1.4
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. Appendix 3: Definitions 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. E-Tran 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 E-Tran. 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: Laws and regulations; Policies; and 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. Appendix 3: Definitions 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. 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: (7(a) and 504) Includes foreign nationals, those granted asylum, refugees, visa holders, nonimmigrant aliens under 8 U.S.C. § 1101(a)(15), those under Deferred Action for Childhood Arrivals (DACA), and undocumented aliens who are in the U.S. illegally. 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): Any person hired by the business to manage day-to-day operations. Appendix 3: Definitions 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: (504) 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 E-Tran 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 Appendix 3: Definitions 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 operations 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 and make a determination 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 or acquires a business that is in the same 6 digit NAICS code with identical ownership and in the same geographic area as the acquiring entity and they are Co-Borrowers, SBA considers this to be a business expansion and not a new business. “Same geographic area” means the acquiring entity is located within a reasonable distance of the subject business, allowing management to exercise similar daily control over both locations. 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-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. Appendix 3: Definitions 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
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