Last reviewed November 2026
A guaranty can be lost after closing as easily as at closing. Before a bank releases collateral, changes terms or lets someone assume a guaranteed loan, it should check whether the agency must approve first.
SBA 7(a) and 504
Under 13 CFR 120.536, SBA must give prior written consent before a lender or CDC takes any of these actions, unless its agreement with SBA says otherwise:
- Increasing the principal above the amount SBA authorized
- Taking an action that gives the lender a preference or creates a conflict of interest
- Compromising the principal balance
- Taking title to property in SBA's name, or taking title to environmentally contaminated property
- Transferring, selling or pledging more than 90% of a loan
- Any other action the loan program requirements say needs consent
For 504 loans, CDCs other than PCLP CDCs also need consent to substantially change the loan terms, release collateral above a set threshold, accelerate the note, release obligors or guarantors, pay off a senior lien on defaulted collateral, or accept a workout of a defaulted loan.
For every action that does not need consent, the lender must write down its reasons and keep the support in the file, so SBA can later see that the decision was prudent and commercially reasonable. SOP 50 57 (version 4, effective November 1, 2025) and SBA's 7(a) servicing and liquidation actions matrix sort common actions into those a lender can take on its own, those that need notice, and those that need SBA approval. Check the current matrix for each action; delegated lenders have more room than non-delegated lenders.
- Actions to check first: collateral substitutions or releases, assumptions, changes of ownership, payment deferrals and extensions, subordinations, adding or releasing guarantors, and interest rate changes.
USDA OneRD (B&I and REAP)
| Action | Rule |
|---|---|
| Release of collateral | Written justification and USDA approval before release (7 CFR 5001.505), except routine working assets sold in the ordinary course, or sale proceeds applied by lien priority, to the guaranteed loan or to replacement collateral |
| Transfer and assumption | Prior written USDA approval, with eligibility documents and new guaranties (5001.506) |
| Subordination of the lender's lien | Written request with a financial analysis and current financial statements; USDA approval first (5001.510) |
| Additional loans or expenditures for the borrower | Notify USDA, even if they are not guaranteed, and do not make them if they would break the loan agreement (5001.512) |
| Interest rate changes | Only as 5001.513 permits; documented by note endorsement or amendment, with copies to USDA within 10 calendar days |
| Mergers, lender transfers and sales of the guaranteed portion | Follow 5001.507 and 5001.508 and the assignment guarantee agreement |
USDA announced a pause, beginning Friday, November 20, 2026, at 5 p.m. Eastern, on B&I servicing requests until a new portal launches in 2027. Check the OneRD Guarantee page before timing a B&I servicing request.
FSA guaranteed farm loans
FSA lets a lender release security on its own only in listed cases, such as a market-value sale with proceeds applied by lien priority, a trade-in for like collateral, or collateral with no value. Other partial releases and subordinations need FSA's written concurrence, and many restructurings have their own requirements in part 762. Default and status reports are due on the schedule in 7 CFR 762.141.
A simple habit
Before any servicing action on a guaranteed loan, the officer answers three questions in the file: Does this need agency consent or notice? Who approved it, and when? What does the file show about why it was prudent?
Download the servicing consent quick reference (PDF).
How KS can help
Kennedy Sutherland LLP prepares modification, assumption, release and subordination documents for guaranteed loans and helps lenders document servicing decisions. Initial consultations for lenders are free. Call 210.259.3885.
This guide is general information for lenders and borrowers, not legal advice. Reading it does not create an attorney-client relationship. SBA, USDA and FSA rules change often, so confirm the current program requirements and the terms of your loan's authorization or commitment before relying on it. Kennedy Sutherland LLP is a private law firm. It is not affiliated with or endorsed by SBA, USDA or FSA.
Sources
- 13 CFR 120.536, servicing actions that need SBA's prior written consent
- 13 CFR 120.524, when SBA is released from liability on its guarantee
- SBA SOP 50 57, 7(a) Loan Servicing and Liquidation (version 4, effective Nov. 1, 2025)
- SBA SOP 50 55, 504 Loan Servicing and Liquidation
- 7 CFR part 5001, OneRD Guaranteed Loans (eCFR)
- 7 CFR 5001.505, collateral inspection and release
- USDA Rural Development, OneRD Guarantee (forms 5001-1 and 5001-2, notices)
- 7 CFR part 762, Guaranteed Farm Loans (eCFR)
Sources checked November 2026.