Glossary · Doing the deal
Commercially Reasonable Efforts
In short
This is a legal standard requiring parties to a contract to make genuine, good-faith efforts to fulfill their obligations without going to extreme lengths or incurring unreasonable costs. It protects both buyer and seller.
What it means in a deal
You'll see this phrase in the LOI and purchase agreement, often regarding obtaining financing or securing necessary third-party consents. It means you can't just passively wait for an SBA loan; you must actively pursue it. If a party fails to meet this standard, it could be a breach of contract.
Related terms
Common questions about Commercially Reasonable Efforts
- What constitutes "commercially reasonable" efforts by a lender in liquidating collateral for a defaulted 7(a) loan?
- What specific documentation is required for a lender to prove 'commercially reasonable' disposition of collateral during 7(a) loan liquidation?
- When a lender is liquidating collateral for a 7(a) loan, what are the specific requirements for proving "commercially reasonable" disposition?
- What constitutes diligent liquidation efforts a lender must demonstrate before submitting a guaranty purchase request?
- What minimum collection efforts must a lender demonstrate before submitting a 7(a) liquidation plan?
- How does the SBA ensure the valuation of goodwill is reasonable for an acquisition 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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