How can I assume an SBA disaster loan as the administrator of my deceased parent’s estate? - Pennsylvania
The Short Answer
In Pennsylvania, an SBA disaster loan generally does not get “assumed” automatically just because you are appointed administrator. Instead, the loan is typically treated as a debt of the decedent that the estate must address, and any change in who is responsible for repayment usually requires the SBA’s written approval and careful probate handling.
Because taking on (or modifying) a federal loan can create personal liability if done incorrectly, it’s smart to speak with a Pennsylvania probate attorney before signing anything or promising repayment.
What Pennsylvania Law Says
When someone dies, their debts do not simply disappear. In most cases, the personal representative (administrator/executor) is responsible for taking control of estate assets, preserving them, and dealing with valid creditor claims—including loans—using estate funds (not the administrator’s personal funds unless you personally guaranteed the debt or otherwise become obligated).
The Statute
The primary law governing a personal representative’s authority to take possession of and administer estate property is 20 Pa.C.S. § 3311.
This statute establishes that the personal representative has the right to take possession of, maintain, and administer the decedent’s real and personal estate during administration, including making reasonable expenditures necessary to preserve estate assets.
In addition, Pennsylvania law recognizes that claims and liabilities that survive the decedent can be pursued by or against the personal representative, which is part of why lenders like the SBA typically communicate with the estate representative after death. See 20 Pa.C.S. § 3373.
Why You Should Speak with an Attorney
While Pennsylvania probate law gives you authority to administer estate assets and address debts, applying those rules to an SBA disaster loan can get complicated quickly—especially if the loan is tied to a business, secured by collateral, or if family members want to keep the underlying property.
- Strict Deadlines: Estate administration has time-sensitive creditor and court requirements, and a missed deadline can create avoidable disputes or delay distributions.
- Burden of Proof: The estate may need to document the loan balance, collateral, payment history, and whether the estate (or someone else) is actually obligated—particularly if there were co-borrowers or guarantors.
- Exceptions: “Assumption” may not be available at all without SBA approval, and signing the wrong document (or paying the wrong way) can accidentally convert an estate obligation into a personal obligation.
If you want more background on how estate debts are handled, you may find this helpful: How Do Creditor Claims Work in a Pennsylvania Estate (and How Are They Paid)? and What Estate Expenses Can Be Paid Before Beneficiaries Receive Distributions in Pennsylvania?.
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Disclaimer: This article provides general information under Pennsylvania law and does not create an attorney-client relationship. Laws change frequently. For legal advice specific to your situation, please consult with a licensed attorney.