Glossary · People and paperwork
Prior Lienholder
In short
This is a lender or creditor who already has a security interest (a lien) on the business's assets. Their claim ranks ahead of new creditors unless a subordination agreement is executed.
What it means in a deal
Before your SBA loan can close, any Prior Lienholders on the assets you're acquiring must agree to subordinate their claims to your new SBA lender. This often involves signing a Lien Subordination Agreement. You'll identify these parties through UCC searches and by reviewing the seller's financial statements and existing debt agreements during due diligence.
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 Prior Lienholder
- What servicing actions require prior written SBA approval?
- What if I have a prior felony conviction on my record?
- Can a lender approve a deferment period without prior SBA approval?
- Can prior bankruptcies or foreclosures impact my SBA 7(a) loan eligibility?
- How does a prior personal bankruptcy impact SBA 7(a) loan eligibility?
- How is prior owner debt converted to equity treated for injection purposes?
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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