Glossary · The loan itself
First lien position
In short
This means your SBA lender has the primary claim on specific business assets if the loan defaults, ahead of all other creditors. Buyers care because it's a standard requirement for an SBA loan, securing the lender's interest.
What it means in a deal
SBA loans typically require the lender to be in a first lien position on all business assets. This is non-negotiable for the lender and is perfected through UCC filings. Ensure all existing liens on assets you are acquiring are released at closing, giving your lender clear priority.
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 First lien position
- 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 are the specific requirements for a lender to obtain a valid first lien position on UCC collateral when prior liens exist?
- What is the SBA's general requirement for lien position on business collateral?
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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