Glossary · Doing the deal
Liquidation Plan
In short
This is a detailed strategy developed by the lender and SBA for recovering funds if a loan defaults. It outlines how assets will be sold to repay the outstanding debt.
What it means in a deal
While you're focused on buying and growing, lenders and the SBA have a liquidation plan in mind from day one. It identifies all collateral and personal guarantees that could be called upon if the business fails. Understand your personal exposure and the collateral pledged if things go south.
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 Liquidation Plan
- 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 are the critical elements a lender must include in the initial liquidation plan submitted to the SBA?
- 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.
Line up financing while you're under LOI
Tell us the business, the price, and your timeline — we'll match you with lenders who close deals like yours and flag anything that stalls the process.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.