Understanding the intricacies of the Small Business Administration (SBA) 7A lending industry requires a comprehensive exploration into the entire spectrum of its operation. This industry holds significant importance in the field of entrepreneurial finance due to its potential to provide capital to small businesses, which are deemed as crucial contributors to the economy. In order to facilitate an in-depth understanding of the sector, it's essential to delve into key findings and crucial insights that encapsulate its current state, trends, challenges and opportunities.

In the realm of entrepreneurial finance, the SBA 7A Loan Program plays an instrumental role. Regulated by the United States Small Business Administration, this program essentially provides a guarantee for loans made by lending institutions to small businesses that wouldn't otherwise meet the lenders' credit criteria.

The theoretical framework that underpins the SBA 7A loan program is rooted in the concept of credit rationing. This economic theory, first propounded by Stiglitz and Weiss (1981), posits that in certain situations, lenders might choose to limit the supply of credit to borrowers despite their willingness to pay higher interest rates. This creates a market for 'rationed borrowers' – a niche that SBA 7A lenders are designed to serve. By providing a government guarantee, the program essentially mitigates the risk for lenders, thus enabling them to extend loans to small businesses that might be deemed 'too risky' in traditional lending scenarios.

According to the SBA, in the fiscal year 2020 alone, approximately 42,000 7A loans amounting to over $22 billion were approved. This indicates a robust demand for such loans, underscoring their vital role in sustaining and fostering the small business ecosystem.

However, this does not negate the fact that the SBA 7A lenders' landscape is not without challenges. One of the primary concerns is the potential for moral hazard - a situation in which one party is tempted to take undue risks because the costs that could result will not be borne by the party taking the risk. In the context of SBA 7A loans, lenders might be inclined to lower their due diligence standards because a significant portion of the loan is guaranteed by the government.

Moreover, the industry also grapples with the issue of adverse selection, a concept derived from information economics. This scenario arises when there's an information asymmetry between borrowers and lenders, leading to a situation where high-risk borrowers are more likely to apply for loans since they know they're high risk, while lenders, unable to distinguish between high-risk and low-risk borrowers, may end up with a disproportionately high number of high-risk loans.

Despite these challenges, it’s important to note that the SBA 7A lenders' industry is a dynamic landscape, continuously evolving in response to economic trends and regulatory changes. For instance, in response to the COVID-19 pandemic, the SBA introduced several adjustments to the 7A program to help support small businesses during the crisis, including payment subsidies and increased loan limits.

In conclusion, the industry of SBA 7A lenders is a complex and profoundly influential segment of the entrepreneurial finance landscape. It navigates a delicate balance between risk mitigation and the provision of capital to small businesses - a task fraught with challenges, but also ripe with opportunities. As such, a deep understanding of the industry can only be achieved through continual engagement with its trends, challenges, and adaptations in the face of changing economic landscapes.