Glossary · Reading the business
Collateral valuation
In short
The process of determining the market value of assets pledged as security for a loan. This helps the lender assess their recovery potential if the loan defaults.
What it means in a deal
For an SBA 7(a) loan, your lender will get an independent appraisal or valuation of any real estate, machinery, equipment, or other significant assets used as collateral. This valuation influences the loan amount and confirms there's sufficient security, even if a collateral shortfall exists.
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 Collateral valuation
- How does the valuation of goodwill specifically impact the collateral requirements for an SBA 7(a) acquisition loan?
- What are the SBA's expectations for a lender's collateral valuation during the liquidation process of a defaulted 7(a) loan?
- When is an independent business valuation required for a partner buyout?
- What valuation methods are acceptable for assessing goodwill in an SBA acquisition?
- What if the business valuation is insufficient to support the purchase price?
- What is the importance of a professional business valuation for an acquisition?
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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