Glossary · The loan itself
Lien position
In short
Lien position refers to the order in which creditors get paid from the sale of collateral if a borrower defaults. As an SBA borrower, your lender usually requires a "first lien" on business assets to protect their investment.
What it means in a deal
The SBA typically requires its lenders to secure a first lien on all available business assets to maximize recovery in case of default. This means the SBA lender is paid before other creditors from the sale of those assets. Understand what collateral is being secured and your lender's lien position on it.
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 Lien position
- What is the SBA's general requirement for lien position on business collateral?
- When can a second lien position be acceptable for specific assets on a 7(a) loan?
- 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?
- How does the SBA view a second lien position on real estate collateral for a 7(a) loan?
- When is a lender permitted to take a second lien position on specific assets for a 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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