Glossary · The loan itself
First lien
In short
A first lien gives a creditor the primary right to be paid from the sale of specific collateral if a borrower defaults. For an SBA 7(a) loan, your lender will almost always require a first lien on all business assets.
What it means in a deal
Securing a first lien means the SBA lender has the highest priority claim over the business's assets. This is a standard requirement to protect the lender and the SBA guaranty. Ensure no existing liens on the business assets would impede your lender's ability to take a first position.
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 First lien
- What are the specific requirements for a lender to obtain a valid first lien position on UCC collateral when prior liens exist?
- What are the SBA's requirements for obtaining a first lien position on all principal business assets?
- Does the SBA always require a first lien position on all business assets for an acquisition loan?
- Is a first lien position always required on all business assets taken as collateral for an SBA 7(a) loan?
- What are the SBA's requirements for obtaining an enforceable first lien position on a 7(a) loan's business assets?
- What is the first step to apply for an SBA 7(a) loan?
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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