Glossary · Doing the deal
Purchase money security interest
In short
This is a specific type of security interest where the loan itself finances the acquisition of the collateral. It gives the lender a strong claim on the purchased assets.
What it means in a deal
When you buy a business with an SBA loan, the lender takes a Purchase Money Security Interest in the assets you're acquiring. This means the loan directly enabled you to buy those specific assets, giving the lender first priority on them if you default. Ensure all assets are properly identified and documented in the loan agreement.
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 Purchase money 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?
- Can an SBA 7(a) loan be used to purchase a business that has been losing money?
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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