Glossary · The loan itself
Business Collateral
In short
Assets of the target business (e.g., equipment, inventory, accounts receivable) pledged to the lender as security for the loan. If you default, the lender can seize and sell these assets.
What it means in a deal
In an SBA 7(a) loan, the lender will take a first lien position on all business assets. While the SBA guaranty helps, the lender still wants to see adequate collateral. An appraisal of tangible assets like equipment and inventory will determine their liquidation value and ensure sufficient coverage.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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 Business Collateral
- What specific collateral must be taken when a 7(a) loan is under-collateralized by business assets, even with a blanket lien?
- What happens if business assets are insufficient to fully collateralize the SBA 7(a) loan?
- What happens if the business assets are insufficient to fully collateralize my SBA 7(a) loan?
- Can cash in the business bank account count as collateral?
- What happens if my business does not have enough collateral?
- Can my business's accounts receivable be used as collateral?
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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