Glossary · Reading the business
Liquidation cost
In short
This refers to the expenses incurred when converting assets into cash, such as appraisal fees, auction costs, or legal fees during a business closure.
What it means in a deal
Lenders consider liquidation costs when assessing the true value of collateral for an SBA loan. The liquidation value of assets is typically lower than their fair market value because these costs are factored in. This impacts how much collateral coverage a business provides to the loan.
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 Liquidation cost
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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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