{"ok":true,"canonical_url":"https://www.capbench.com/glossary/liquidation-cost","api_url":"https://www.capbench.com/api/public/glossary/liquidation-cost","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-17","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","CapBench lender and franchise enrichment"],"term":{"slug":"liquidation-cost","term":"Liquidation cost","group":"Reading the business","definition":"This refers to the expenses incurred when converting assets into cash, such as appraisal fees, auction costs, or legal fees during a business closure.","what_it_means":"Lenders consider liquidation costs when assessing the true value of collateral for an SBA loan. The liquidation value of assets is typically lower than their fair market value because these costs are factored in. This impacts how much collateral coverage a business provides to the loan.","url":"https://www.capbench.com/glossary/liquidation-cost","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://www.capbench.com/sba-7a/sources/sop-50-10"}],"related":[{"slug":"liquidation-value","term":"Liquidation Value","url":"https://www.capbench.com/glossary/liquidation-value"},{"slug":"collateral-analysis","term":"Collateral analysis","url":"https://www.capbench.com/glossary/collateral-analysis"},{"slug":"appraisal","term":"Appraisal","url":"https://www.capbench.com/glossary/appraisal"},{"slug":"fair-market-value","term":"Fair market value","url":"https://www.capbench.com/glossary/fair-market-value"}],"related_questions":[{"question":"Can closing costs such as legal and accounting fees be included in the total project cost for the 10% calculation?","url":"https://www.capbench.com/sba-7a/questions/can-closing-costs-such-as-legal-and-accounting-fees-be-included-in-the-total-project-cost-"},{"question":"What factors primarily influence the premium cost of business life insurance?","url":"https://www.capbench.com/sba-7a/questions/what-factors-primarily-influence-the-premium-cost-of-business-life-insurance"},{"question":"Can an SBA 7(a) loan cover the cost of inventory for a business?","url":"https://www.capbench.com/sba-7a/questions/can-an-sba-7-a-loan-cover-the-cost-of-inventory-for-a-business"},{"question":"Can an SBA 7(a) loan cover the cost of a business valuation or appraisal?","url":"https://www.capbench.com/sba-7a/questions/can-an-sba-7-a-loan-cover-the-cost-of-a-business-valuation-or-appraisal"},{"question":"What percentage of the project cost does the SBA typically expect as a down payment?","url":"https://www.capbench.com/sba-7a/questions/what-percentage-of-the-project-cost-does-the-sba-typically-expect-as-a-down-payment"},{"question":"Can an SBA 7(a) loan cover the cost of a franchise transfer fee in an acquisition?","url":"https://www.capbench.com/sba-7a/questions/can-an-sba-7-a-loan-cover-the-cost-of-a-franchise-transfer-fee-in-an-acquisition"}]},"caveats":["Definitions represent CapBench's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"CapBench Glossary — Liquidation cost","url":"https://www.capbench.com/glossary/liquidation-cost","source_type":"CapBench Data"}}