Glossary · The loan itself
Deficiency judgment
In short
This is a court order requiring a borrower or guarantor to pay the remaining debt after collateral has been sold and didn't cover the full loan amount. As a buyer, you care because it highlights the personal risk associated with your SBA loan.
What it means in a deal
If your business defaults on an SBA 7(a) loan and the lender liquidates all available collateral, but the proceeds don't cover the outstanding debt, the lender can pursue a deficiency judgment against you and any other guarantors. This judgment allows the lender to collect the remaining balance from your personal assets, underscoring the importance of your personal guarantee.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Deficiency judgment
- Does having a recent civil judgment against me affect my SBA 7(a) loan eligibility?
- What if my personal credit report shows a judgment that has been satisfied or paid off?
- Will a past tax lien or judgment on my credit report prevent SBA 7(a) loan approval?
- Does a past civil lawsuit or judgment, not criminal, affect my eligibility for an SBA 7(a) loan?
- Will an outstanding personal judgment (e.g., from a civil lawsuit) prevent me from getting an SBA 7(a) loan?
- Will a satisfied judgment on my personal credit report, even if paid, negatively impact my SBA 7(a) loan approval?
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.
See which SBA lenders would fund your deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to approve a 7(a) like yours and flag what trips up approval.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.