Glossary · The loan itself
Priority Security Interest
In short
This grants a lender the right to be paid first from the proceeds of selling specific collateral if a borrower defaults. The SBA typically requires a first priority security interest.
What it means in a deal
For an SBA 7(a) loan, the lender generally requires a first Priority Security Interest on all business assets. This means if the business defaults, your SBA lender gets paid before other creditors from the sale of those assets. This position is established through UCC filings and, if necessary, Lien Subordination Agreements with other creditors.
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 Priority Security Interest
- How does the SBA require lenders to perfect security interests on accounts receivable and inventory?
- How does a lender perfect a security interest in intellectual property for a 7(a) loan?
- If the seller requires a security interest, how does it affect the standby status of their note?
- Are there specific requirements for a lender to obtain and maintain a security interest in life insurance policies used as collateral?
- How does a lender perfect its lien on a security interest in a business's intellectual property for a 7(a) loan?
- What are the specific lien priority requirements for lenders on both business and personal collateral securing a 7(a) loan, particularly when junior liens exist?
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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