Glossary · The loan itself
Collateral Seizure
In short
What happens when a lender takes possession of assets pledged for a loan due to default. For you, it means losing the business assets you put up if you can't pay.
What it means in a deal
If your SBA 7(a) loan defaults, the lender will move to seize the collateral you pledged, which includes business assets and potentially personal assets if you signed a personal guarantee. This is the ultimate recourse for the lender and a key risk to understand.
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 Seizure
- 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?
- 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?
- Is collateral always required for an 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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