Glossary · The loan itself
Secondary source of repayment
In short
Beyond the business's cash flow, this is another way the loan can be repaid, typically through collateral or a personal guarantee. It's the lender's backup plan.
What it means in a deal
While the primary source of repayment for an SBA loan is the business's cash flow, lenders also evaluate secondary sources. This primarily includes the liquidation value of collateral and the borrower's personal guarantee. A strong secondary source can mitigate risk for the lender if the business's cash flow deteriorates.
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 Secondary source of repayment
- What specific environmental due diligence is required for real estate collateral used as a secondary source of repayment?
- How does the SBA verify the source of my equity injection funds?
- What documentation is required to prove the source of my equity injection funds?
- What documentation is needed to verify the source of my cash equity injection?
- What documentation is required to verify the source of my cash equity injection?
- What specific documentation is required to verify the source of my equity injection funds?
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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