A defaulted SBA loan does not automatically disappear after six years. The commonly cited six-year rule generally limits certain federal lawsuits for money damages based on contracts. It is not a universal expiration date for the debt, collateral rights, or administrative collection. [1][3]
What Section 2415 actually limits
Subject to statutory exceptions, 28 USC 2415(a) gives the United States six years after a contract claim accrues to file a money-damages action. It also provides an alternative period of one year after final decisions in applicable administrative proceedings required by contract or law, whichever is later. [1]
Determining accrual requires the actual loan and collection history. The first missed payment, an acceleration demand, a guarantee payment, and referral for collection are different events. Do not assume that the date appearing on a collection letter necessarily started the lawsuit clock. Identify the claim being asserted, who owns it, and the contractual obligations involved.
Payments, acknowledgments, and excluded periods matter
The statute expressly provides that a later partial payment or written acknowledgment of debt causes the right of action to accrue again at that time. A six-year calculation based solely on the original default date can therefore be wrong. [1]
Section 2416 also excludes specified periods from the calculation. These include circumstances involving absence from the United States, exemption from legal process, and material facts that the responsible government official did not and reasonably could not know. Whether an exclusion applies depends on evidence, not merely the age of the account. [2]
Administrative offset is a separate collection route
Section 2415 preserves collection through administrative offset under 31 USC 3716. That offset statute generally removes time limitations on initiating or taking an offset, while retaining applicable statutory protections and exceptions. A potential defense to a contract lawsuit therefore does not establish that a Treasury offset must stop. [1][3]
Review the collection notice for the proposed method, dispute rights, and response deadline. Request the note, guarantee, payment history, acceleration documents, and an explanation of the balance. Respond to an actual summons within its deadline even if you believe the claim is old; the court must receive any defense through the proper procedure.
Keep limitation questions separate from PPP loan forgiveness eligibility and from the effect of a bankruptcy discharge injunction. Each involves different legal requirements. A lender’s accounting charge-off also should not be mistaken for a release of the borrower or guarantor.
Primary sources
- 28 U.S. Code 2415 – Time for Commencing Actions Brought by the United States
- 28 U.S. Code 2416 – Exclusions
- 31 U.S. Code 3716 – Administrative Offset
Sources checked: October 31, 2026.