Glossary · The loan itself
Advance rate(Discount)
In short
The percentage of a collateral's value a lender is willing to finance. For a buyer, this determines how much of your loan can be secured by specific assets like accounts receivable or inventory, impacting your collateral shortfall.
What it means in a deal
Lenders apply advance rates to different types of collateral, such as 75-85% for accounts receivable or 50% for inventory. If the total loan amount exceeds the available collateral after applying these rates, you'll have a collateral shortfall that needs to be addressed, often with a personal guarantee or additional assets.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Advance rate
- Can a credit card cash advance be used for my down payment?
- Can I use funds from a personal credit card cash advance for my equity injection?
- How does a lender verify equity injection from a borrower's personal credit card cash advance?
- What alternative base rates are available for variable-rate 7(a) loans besides the Wall Street Journal Prime rate?
- What is the 'Prime Rate' when talking about SBA 7(a) loan rates?
- What specific alternative base rates are permissible for variable rate 7(a) loans?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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