Glossary · Doing the deal
Disposition
In short
The sale or disposal of collateral assets, typically after a loan default, to recover funds for the lender. It's the final stage if a loan cannot be repaid.
What it means in a deal
If a loan defaults, the lender will move to dispose of collateralized assets to recoup their losses. This involves selling equipment, real estate, or other pledged items. As a buyer, understand the liquidation value of the collateral to assess the lender's potential recovery if you were to default, and how that impacts your personal guarantee.
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 Disposition
- What specific documentation is required for a lender to prove 'commercially reasonable' disposition of collateral during 7(a) loan liquidation?
- Can a lender accept a "soft offer" for collateral in liquidation, or is a formal appraisal always required for disposition?
- When a lender is liquidating collateral for a 7(a) loan, what are the specific requirements for proving "commercially reasonable" disposition?
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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