Civil Monetary Penalties Adjustment – What 7(a) Lenders Should Know

July 8, 2025

Bob Coleman
Founder & Publisher

SBA Hot Topic Tuesday: Civil Monetary Penalties Adjustment – What 7(a) Lenders Should Know

SBA recently announced its annual inflation adjustments to civil monetary penalties in a Federal Register notice dated June 3, 2025.

The notice highlights the updated penalty amounts across various SBA programs, including those applicable to 7(a) lenders. 

Penalties That May Be Imposed on 7(a) Lenders

Civil monetary penalties for SBA violations are designed to enforce accountability and prevent risky practices that could undermine the program’s integrity. Below are the key infractions that may result in penalties for 7(a) lenders, along with potential consequences:

1. False Certifications or Representations

Under 31 U.S. Code § 3729, the False Claims Act empowers the SBA to impose penalties on lenders who knowingly submit false information or certifications regarding loans. For example, if a lender overstates an applicant’s eligibility or misrepresents financial data, they risk substantial fines. The adjusted penalties for such violations now stand at over $27,000 per false claim, based on recent inflation adjustments.

2. Noncompliance with SBA Standards

The SBA has stringent guidelines governing loan underwriting, servicing, and reporting. Failure to adhere to these requirements can result in penalties designed to protect program integrity. For instance, if a lender’s poor oversight leads to fraudulent activity, fines can be imposed. Recent updates to inflation-adjusted penalties may push these amounts above $23,000 per occurrence.

3. Violation of Conflict of Interest Rules

Lenders using their position for personal gain or to benefit related parties can face severe fines. Whether it’s awarding loans to connected entities or abusing discretion, the SBA has zero tolerance for such behavior. Fines tied to such infractions are adjusted annually and remain a critical compliance consideration for 7(a) lenders.

4. Improper Loan Guarantees

Lenders approved under the 7(a) program benefit from government guarantees on a portion of the loan value. If a lender repeatedly exhibits negligence or avoids responsibilities, fines can mitigate systemic risks while sending a strong message regarding accountability.

Importance of Compliance

For 7(a) lenders, staying ahead of compliance requirements and understanding the financial risks tied to civil penalties is paramount.

Source: Federal Register Notice