In our newsletter on March 9, 2026, we discussed the site visit requirements for SBA loan closings (Click here to read on our website). As a follow up, this newsletter outlines the post-Default Site Visit requirements pursuant to SOP 50 57 4 effective November 1, 2025. (Click here to access the SOP on the SBA website).
A post-Default Site Visit Report is defined as the paper or electronic record documenting the Lender’s findings and conclusions after visiting or contracting a third party to visit the Borrower’s business premises. A post-Default Site Visit Report should cover, for example, the Lender’s efforts to: determine whether a workout is feasible; identify the collateral available for liquidation; establish the collateral’s Recoverable Value; determine whether the Borrower is behind on the rent and whether a liquidation sale of the personal property collateral can be held on-site; determine whether any real property collateral is occupied by a Person other than the Borrower; develop a liquidation strategy; assess any environmental risk associated with the anticipated method of liquidation; and arrange for the care and preservation of the collateral pending liquidation.
Lenders should prepare a post-Default Site Visit Report after every visit to the Borrower’s business premises, regardless of whether the Loan is in regular servicing or liquidation status, and keep a copy of the report(s) in the Lender’s Loan File.
In the following circumstances, unless the Loan is unsecured, or the aggregate Recoverable Value of the real or personal property collateral is less than $10,000, Lenders must conduct a site visit within the following time frames:
-
- Payment Default—within 60 calendar days of an uncured payment Default, or sooner if the collateral could be removed, lost or dissipated.
- Non-payment Default—within 15 calendar days of the occurrence of an adverse event that causes the Loan to be classified in liquidation status, or sooner if the collateral could be removed, lost or dissipated.
- EWCP Loans – physical site visits may be waived for Export Working Capital Program Loans secured only by foreign accounts receivable, with the written concurrence of the SBA Export Finance Manager at the appropriate U.S. Export Assistance Center. Lenders must coordinate site visits in accordance with the guidance provided in SOP 50 57 4, Chapter 16 for all other collateral.
A Repair or a full or partial Denial of Liability on the 7(a) loan guaranty is justified if the collateral required by the Loan Authorization/E-Tran Terms and Conditions is either unavailable or declines in value due to the Lender’s failure to conduct a timely post-Default site visit as required by Chapter 16 of SOP 50 57 4, and that failure caused, or could cause, a Material Loss on the Loan. SBA will use the Recoverable Value of the required collateral that was either unavailable for liquidation, or the aggregate amount by which the required collateral declined in value due to the Lender’s failure to conduct a timely site visit, as the basis for any loss associated with a Repair or Denial of Liability for the Loan.
With regard to all 7(a) Loans (excluding Loans processed under the Certified Lenders Program), Lenders must include a Site Visit Report with their Wrap-up Report, unless it was previously submitted with the Universal Purchase Package. Lenders that do not conduct a site visit must document their reasons for why a site visit was neither necessary nor prudent, keep a copy of the action in their Loan File, and include it in their final Wrap-up Report.
If your lending institution has questions about site visits, or other SBA lending matters, please contact us at SBAQuestions@JellumLaw.com.