Glossary · Doing the deal
Federal tax lien
In short
This is a legal claim by the IRS against a business's assets due to unpaid federal taxes. It takes priority over most other debts and can block an acquisition.
What it means in a deal
A federal tax lien indicates serious financial trouble and must be resolved before or at closing for an SBA loan. The lien typically needs to be paid in full from sale proceeds, or the IRS must agree to subordinate it, which is rare for a 7(a) loan. Discovering this late can kill a deal.
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 Federal tax lien
- What if a business applicant has outstanding federal tax liens or delinquencies?
- Can a past federal tax lien, now paid in full, impact my eligibility for an SBA 7(a) loan?
- What impact does a principal's recent federal tax lien have on 7(a) loan eligibility, even if paid?
- How does a borrower's prior federal debt delinquency or default (e.g., tax lien) impact their 7(a) loan eligibility?
- How does the lender determine if a prior federal debt delinquency or default (e.g., student loan, tax lien) impacts 7(a) loan eligibility?
- What steps must a lender take if a 7(a) loan becomes delinquent due to the borrower's federal tax liens?
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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