Glossary · Doing the deal
Assignment of the Security Interest
In short
This is the formal transfer of a lender's legal claim on collateral to another party, often the SBA. It ensures the SBA can step in if the lender fails to perform.
What it means in a deal
While your loan is with the lender, the SBA guarantees a portion of it. To secure their guarantee, the lender assigns their security interest in your collateral to the SBA. This is standard procedure, ensuring the SBA has a claim if the loan defaults and the lender needs to collect on the guarantee.
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 Assignment of the Security Interest
- If the seller requires a security interest, how does it affect the standby status of their note?
- How does the SBA require lenders to perfect security interests on accounts receivable and inventory?
- How does a lender perfect a security interest in intellectual property for a 7(a) loan?
- Are there specific requirements for a lender to obtain and maintain a security interest in life insurance policies used as collateral?
- How does a collateral assignment of life insurance protect a lender?
- How does a lender perfect its lien on a security interest in a business's intellectual property for a 7(a) loan?
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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