Glossary · Doing the deal
Security instrument
In short
This is a legal document, like a mortgage or a security agreement, that grants the lender a claim on specific assets (collateral) if you default on the loan. It's how the lender secures their investment.
What it means in a deal
For an SBA loan, the security instrument typically includes a UCC filing for business assets and potentially a mortgage for real estate. These documents establish the lender's lien position on the collateral. Your lawyer will review these to ensure they accurately reflect the agreed-upon collateral and protect your interests.
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 Security instrument
- 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?
- Do I have to put up my personal house as security for an SBA 7(a) loan?
- If the business property is leased, can the SBA loan finance a security deposit for the lease?
- If the business property is leased, can an SBA 7(a) loan finance security deposits for the lease?
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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