Glossary · Reading the business
Liquidation Value
In short
This is the estimated price an asset or business would fetch if sold quickly, often under distressed conditions. It's usually much lower than fair market value or going concern value.
What it means in a deal
Lenders consider liquidation value during their collateral analysis. While they prefer a business to be a going concern, they assess what assets could be sold for if the business fails. This provides a worst-case scenario recovery estimate for the collateral securing your 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 Value
- What is the required timeframe for a lender to submit a liquidation plan?
- What if the primary business assets are specialized machinery with limited resale value?
- How does the SBA evaluate the value of contributed equipment for equity injection?
- How does a lender comply with SBA requirements for maximizing recovery on collateral during liquidation?
- What specific documentation must a lender include in a liquidation plan submitted to the SBA?
- What constitutes diligent liquidation efforts a lender must demonstrate before submitting a guaranty purchase request?
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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