Why lenders won’t negotiate better terms on an SBA guaranteed loan

With SBA guarantied loans, lenders almost never modify the terms of the note, as they are extremely concerned with losing their SBA guaranty for failing to “exhaust their legal remedies and convert the collateral to cash”, presumably an SBA guideline and requirement. Considering most SBA guaranty purchases are in the 70-85% range of the principal amount, there’s a lot on the line for these lenders. Thus, even though an extremely high level of cooperation and willingness to make things work was displayed by the guarantors, the bank simply do not budge. As a workout officer in a consulting firm, I see this scenario played out every single day from banks across the nation with SBA loans. In fact, in over one hundred workouts, I can remember maybe two instances where an SBA loan was modified (not just a deferment). This is further proof that workouts are generally the only viable scenario to a distressed business indebted to an SBA loan.