The SBA may guarantee loans made by a financial institution and repay them if the borrowers stop making payments.

Question

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This is one of the main functions of the SBA, to provide loan guarantees to encourage lenders to make loans to small businesses that may not otherwise qualify for traditional financing. If a borrower defaults on the loan, the SBA will repay a portion of the outstanding balance to the lender.

The SBA May Guarantee Loans Made by a Financial Institution