U.S. Small Business Administration (SBA)

within 30 calendar days of SBA's assumption requirements letter¹

SBA loans do not discharge at the borrower's death. The estate, surviving business partners and the lender work out whether the loan is assumed, repaid from the sale of the business, or repaid from estate assets.⁴

SBA sets no death-notification deadline of its own. Payments remain due on the existing schedule, and a death does not pause them.⁴

A surviving business partner, family member or buyer may be able to assume a 7(a) loan; the lender normally decides. It must confirm the assumptor meets SBA eligibility requirements, will be the primary owner, has satisfactory credit and can repay in full.⁵

SBA's prior written approval is needed where a 7(a) assumption releases an obligor on a loan in payment default or liquidation, or the borrower's ownership changes within 12 months after final disbursement. The assumption agreement must carry a "due on sale or death" clause barring any further assumption.⁵

For a 504 loan, the CDC needs SBA's prior written consent to substantially alter the terms of a loan instrument or release an obligor.⁶

Where the estate cannot repay in full, the lender may liquidate the collateral. SBA may purchase its guaranteed portion once the borrower has been in default on an installment for more than 60 calendar days and business personal property collateral has been liquidated.⁷

SBA disaster loans (physical damage, EIDL and COVID-19 EIDL) are made and serviced directly by SBA and are not forgivable. They do not discharge at the borrower's death; the estate or a co-borrower remains responsible for payments.⁸

COVID-19 EIDL required collateral on loans greater than $25,000 and a personal guaranty on loans greater than $200,000. A COVID-19 EIDL of $200,000 or less carries no personal guaranty, so there is generally no guarantor claim against the estate, though the loan remains a debt.⁹

A COVID-19 EIDL is not forgiven at death. A surviving co-borrower, heir or buyer can request a servicing action (assumption, change in ownership, release of collateral or release of guarantor) using the requirement letter for that request type.³

A surviving co-borrower, heir or buyer may request to assume an SBA disaster loan. The requirements letter is not a commitment: approval may be conditioned on curing defaults and correcting collateral deficiencies, and assumption grants no rights of ownership in the collateral.¹

The personal guarantee on an SBA business loan becomes a claim against the deceased guarantor's estate. Holders of at least a 20 percent ownership interest generally must guarantee the loan, and SBA or the lender may require guarantees from other individuals or entities.¹⁰

The lender is directed to file a creditor's claim in the probate court within the time frames state law prescribes, review the inventory of the estate against the financial documents the decedent gave the lender, and monitor the proceedings.⁵

If liquidation ends with no collectible obligor left to refer to Treasury, for example because the obligor is deceased, SBA charges the loan off rather than referring it for further collection.⁵

A claim of the United States is paid first where a deceased debtor's estate is not enough to pay all debts. A personal representative who pays other debts first is personally liable to the extent of that payment.¹¹

SBA lenders may require life insurance as a condition of the loan, with the proceeds assigned as collateral.⁴

Where a policy was assigned, lenders apply the proceeds to the principal balance. They may release some or all of the proceeds only where the death has no significant impact on the future management of the business and the proceeds are needed for a valid business purpose or to prevent a financial hardship.⁴

Who to notify depends on the loan program. A 7(a), 504 or microloan is serviced day to day by the lender, Certified Development Company or intermediary lender, not SBA, so the executor or surviving business partner contacts the lender.^{4, 12}

The executor notifies the servicing lender in writing, with a certified death certificate and the letters testamentary or of administration.⁴

SBA makes and services disaster loans, including COVID-19 EIDL, directly. Physical-damage and non-COVID EIDL loans go to the Disaster Assistance Customer Service Center, and a COVID-19 EIDL to the COVID EIDL Servicing Center.^{8, 13}

Since October 1, 2025 SBA accepts electronic payments only, through the SBA Loan Portal, and checks mailed after that date are returned to the sender. The Loan Portal replaced the Capital Access Financial System (CAFS) and shows loan details and the loan number.^{14, 15}

For a 7(a), 504 or microloan, the original loan documents name the lender. If the lender cannot be located, contact the SBA Answer Desk.¹³

COVID-19 EIDL questions, by email or a message through the SBA Loan Portal, with the loan or application number^{13, 3}

Disaster loan assumption packets, by one submission method only^{1, 20}

Disaster loans in foreclosure: contact the SBA employee named in the foreclosure letter^{1, 20}

Loan payments, online or by phone^{14, 15}