Glossary · Doing the deal
Prior Liens
In short
These are existing legal claims against a business's assets by other creditors, meaning those creditors have a superior right to the asset compared to your new SBA lender.
What it means in a deal
Your SBA lender will require a first lien position on all business assets. Any prior liens from existing business debt must be paid off at closing or formally subordinated to your new SBA loan. A thorough lien search during your due diligence will identify these and ensure a clear title to assets.
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 Liens
- Can an SBA 7(a) loan be used to purchase a business with significant prior tax liens on its assets?
- If I have prior civil lawsuits or judgments, distinct from tax liens or bankruptcy, will that affect my SBA loan?
- What are the specific requirements for a lender to obtain a valid first lien position on UCC collateral when prior liens exist?
- What if a business applicant has outstanding federal tax liens or delinquencies?
- What if a borrower has outstanding judgments or liens from non-federal entities?
- What happens if a borrower has outstanding judgments or liens from non-federal entities?
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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