The 20-second answer
This tool estimates the annual default rate on SBA 7(a) loans: of all the loans outstanding at the start of a fiscal year, what share slipped into default during it. Program-wide, that's running about 5.35% for FY2026 (annualized), more than double the 2.53% pre-COVID baseline. But the average hides everything that matters: medical and professional practices default far below it, while food service and some retail run well above. The industry you buy into is one of the biggest risk decisions you'll make.
How this is calculated
Every SBA 7(a) loan is public record. The SBA releases loan-level data under the Freedom of Information Act, and this tool is built directly from the official 7(a) FOIA dataset (as of June 30, 2026). For each fiscal year we take the loans that were disbursed and still open on October 1, then measure how many entered default during that year.
- The headline rate is an estimate. Public data only records charge-offs, which are booked with a long lag. So each year's charge-off rate is scaled up to published program-wide benchmarks for early defaults (liquidation, guaranty purchase, or charge-off). The same yearly factor is applied to every industry, state and lender, which is why the per-industry figures are estimates, not exact counts.
- The teal line is the actual, unscaled charge-off rate — the hard number straight from the data, before any benchmark scaling.
- FY2026 is a partial year (nine months), annualized and shown as a dashed segment on the chart.
- Pre-COVID baseline pools fiscal years 2017–2019 to give a "normal times" reference point.
How to use this when buying a business
Compare your target's industry to the program line. Sitting well above it isn't a veto — plenty of great businesses live in higher-default categories — but it tells you to underwrite harder, keep more cushion, and structure the debt conservatively. Pair this with the DSCR calculator and the Deal Scorer before you commit.
The safest industries to buy
The categories SBA lenders lose the least on are overwhelmingly licensed professional and medical services: dentists, veterinarians, optometrists, physicians, insurance agencies and CPA firms. They share a pattern — a credentialed operator, sticky recurring customers, and demand that holds up in a downturn. Load any of them in the explorer above to see the full-history trend.
The riskiest industries
At the other end, food service and several thin-margin retail categories carry the highest default rates. Low margins, high fixed costs and economy-sensitive demand all push the numbers up. These can absolutely be bought well — they just demand a sharper operator and a more conservative deal.
Frequently asked questions
For FY2026 (annualized), an estimated 5.35% of outstanding SBA 7(a) loans are entering default, up from a ~2.53% pre-COVID baseline. The actual recorded charge-off rate is lower (~1.74%) because charge-offs lag; the headline scales that to published early-default benchmarks.
A charge-off is recorded only after a long workout process, so the public charge-off number understates how many loans have actually gone bad recently. The headline estimate scales the charge-off rate up to published program-wide early-default benchmarks to approximate true defaults.
No. The rate describes the industry on average, not your specific deal. A strong business with real cash flow and a sensible structure can be a great buy in a "risky" category. Treat it as a reason to underwrite more carefully, not an automatic no.
Disclaimer: Figures are estimates calculated by Acquisition Ace from the SBA's public 7(a) FOIA loan data (as of June 30, 2026), scaled to published program benchmarks. They describe historical loan outcomes and are for education and research only — not a prediction, loan offer, or financial advice. Your results depend on the specific business, deal, and operator. Source: SBA 7(a) FOIA data, as of June 30, 2026 · Tool by the Acquisition Ace team.
