Glossary · Doing the deal
Second lien position
In short
This means another lender has a claim on the collateral that is subordinate to the first lien holder. If the business defaults, the second lien holder gets paid only after the first lien is satisfied.
What it means in a deal
The SBA 7(a) loan typically requires a First lien on business assets. If there's a Seller note or other financing, it might take a Second lien position. Understand the implications for your Collateral and ensure the SBA loan's priority, as this affects who gets paid first if things go south.
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 Second lien position
- When can a second lien position be acceptable for specific assets on a 7(a) loan?
- How does the SBA view a second lien position on real estate collateral for a 7(a) loan?
- When is a lender permitted to take a second lien position on specific assets for a 7(a) loan?
- What is the SBA's general requirement for lien position on business collateral?
- What are the SBA's requirements for obtaining a first lien position on all principal business assets?
- Does the SBA always require a first lien position on all business assets for an acquisition loan?
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.
Line up financing while you're under LOI
Tell us the business, the price, and your timeline — we'll match you with lenders who close deals like yours and flag anything that stalls the process.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.