Glossary · The loan itself
Junior lien
In short
A junior lien is a claim on collateral that is subordinate to another lien, meaning it gets paid only after the primary lienholder. As a buyer, you primarily care about the SBA loan's first lien position.
What it means in a deal
In an SBA 7(a) loan, the SBA lender almost always requires a first lien position on all business assets and sometimes personal real estate. A junior lien means another creditor has a prior claim, which the SBA typically won't allow on primary collateral. Ensure no existing junior liens interfere with the SBA's required lien position.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Junior lien
- What are the specific lien priority requirements for lenders on both business and personal collateral securing a 7(a) loan, particularly when junior liens exist?
- Can a lender accept a junior lien position on non-real estate business assets as collateral for an SBA 7(a) loan?
- What are the specific requirements for a lender to obtain a valid first lien position on UCC collateral when prior liens exist?
- When must a lender take a lien on specific equipment for collateral, beyond a blanket lien?
- Is a separate lien required on each piece of equipment if a blanket lien is already in place?
- Does the SBA take a lien on my personal home as 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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