24 Month Rule
Prudent Liquidation Deadline

As stated in the SOP 50 57 3, lenders should make every effort to fully liquidate 7(a) loans within 24 months of a loan's guaranty purchase.  Once liquidation is complete, a wrap-up report must be submitted within 30 days.

​SBA understands that not all loans can be fully liquidated in 24 months.  Therefore, an extension program was created.  This process allows lenders to submit documentation that fully supports the continued and ongoing efforts of the Lender to liquidate the loan. For all loans purchased from the secondary market by SBA where the liquidation will not be complete by the deadline, Lenders must submit requests for extensions of the liquidation deadline. The requests must include documentation that supports the lender is conducting prudent liquidation or litigation that will require additional time. Lenders that do not comply with the 24-Month Liquidation Deadline and do not submit documented requests for extensions could potentially lose their loan's guaranty.

LendServPro can evaluate a lender’s portfolio and identify which loans may require the requests for liquidation extension. We can help collect the appropriate documents that validate the need for a liquidation extension with SBA. Once liquidation is complete, we can prepare the Wrap-Up Report and expense reimbursement for a timely submission to SBA.