Glossary · Doing the deal
Release of collateral
In short
This is the formal process by which a lender relinquishes its security interest in specific assets that were pledged as collateral for a loan. It's usually done after the loan is paid off.
What it means in a deal
When you pay off a loan or refinance, the existing lender must formally release its collateral, typically by filing a UCC termination statement. Ensure this is done promptly at closing for any existing liens on the business assets you are acquiring, otherwise, you could inherit encumbered assets and face issues with your new lender.
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 Release of collateral
- Can a 7(a) lender release a portion of the collateral without prior SBA approval if the remaining collateral is sufficient?
- When can a 7(a) lender release a portion of the collateral without prior SBA approval if the remaining collateral is sufficient?
- Which specific types of collateral can a lender release without prior SBA approval during the servicing phase of a 7(a) loan?
- When can a lender release collateral on a 7(a) loan without obtaining prior SBA approval?
- Can a lender release a personal guarantor without SBA approval if collateral fully covers the loan?
- What are the specific requirements for a lender to release collateral on a 7(a) loan during its term?
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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