Glossary · Doing the deal
Initial Liquidation Plan
In short
A preliminary strategy developed by the lender to recover funds if a loan defaults, outlining how collateral would be seized and sold. While you aim for success, this plan is always in the background.
What it means in a deal
When a loan defaults, the lender must submit an Initial Liquidation Plan to the SBA detailing their strategy to recover the outstanding balance. This plan identifies all Collateral, estimates its value, and outlines the steps for Debt Collection and sale. Understanding your personal guarantee and pledged assets means understanding this potential outcome.
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 Initial Liquidation Plan
- What are the critical elements a lender must include in the initial liquidation plan submitted to the SBA?
- What is the required timeframe for a lender to submit a liquidation plan?
- What specific documentation must a lender include in a liquidation plan submitted to the SBA?
- What minimum collection efforts must a lender demonstrate before submitting a 7(a) liquidation plan?
- What is the role of a "workout plan" in the liquidation of a defaulted 7(a) loan?
- What is the maximum timeframe for a lender to submit a liquidation plan for a defaulted 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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