Glossary · The loan itself
Extraordinary Liquidation Expense
In short
These are unusual costs incurred by the lender during the process of liquidating a defaulted SBA loan, often requiring special approval from the SBA. For a buyer, this term highlights the potential for unexpected costs if a loan goes bad.
What it means in a deal
While you hope to never encounter this, Extraordinary Liquidation Expenses are part of the SBA's rules for how lenders recover funds if a business defaults. Examples might include significant legal fees or specialized appraisal costs. The SBA limits what expenses it will reimburse the lender.
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 Extraordinary Liquidation Expense
- What is the process for a lender to obtain SBA approval for extraordinary liquidation expenses?
- How does business overhead expense insurance differ from key-person life insurance?
- What specific documentation is required in the Universal Purchase Package (UPP) to support eligible liquidation expenses?
- How does a lender properly account for eligible liquidation expenses within the Universal Purchase Package (UPP)?
- How should a lender document eligible liquidation expenses within the UPP for a 7(a) guaranty purchase?
- What specific documentation must a lender include in the Universal Purchase Package (UPP) to justify liquidation expenses?
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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