Glossary · Doing the deal
Estimated Liquidation Cost
In short
The projected expenses a lender incurs when liquidating collateral to recover a defaulted loan. These costs reduce the net recovery, so lenders factor them into their risk assessment.
What it means in a deal
When a loan defaults, the lender will calculate the Estimated Liquidation Cost, which includes legal fees, appraisal costs, marketing, and sales expenses to sell the Collateral. These costs are subtracted from the gross proceeds of a UCC Sale, meaning less money goes towards the outstanding loan balance.
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
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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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