Glossary · The loan itself
Collateral
In short
Collateral is an asset pledged to a lender to secure a loan. If you default, the lender can seize and sell the collateral to recover their money.
What it means in a deal
For an SBA 7(a) loan, the business assets you acquire, like equipment, inventory, and accounts receivable, serve as primary collateral. The SBA also requires a personal guarantee from all owners, and if other assets are available, a lien may be placed on those too to cover any collateral shortfall.
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 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 a 7(a) lender release a portion of the collateral without prior SBA approval if the remaining collateral is sufficient?
- When can a 7(a) lender release a portion of the collateral without prior SBA approval if the remaining collateral is sufficient?
- What happens if the business assets are not enough to fully collateralize the SBA 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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