{"ok":true,"canonical_url":"https://dealroom.so/glossary/collateral-disposition-expense","api_url":"https://dealroom.so/api/public/glossary/collateral-disposition-expense","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"collateral-disposition-expense","term":"Collateral Disposition Expense","group":"Doing the deal","definition":"The costs associated with selling or otherwise disposing of collateral after a loan default. These expenses reduce the net proceeds applied to the outstanding loan balance.","what_it_means":"In a default scenario, the lender will incur costs to appraise, market, and sell collateral. These disposition expenses, like legal fees or broker commissions, come off the top of the sale price. The net amount then reduces your outstanding loan balance, impacting your personal guarantee exposure.","url":"https://dealroom.so/glossary/collateral-disposition-expense","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"collateral","term":"Collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"eligible-liquidation-expense","term":"Eligible Liquidation Expense","url":"https://dealroom.so/glossary/eligible-liquidation-expense"},{"slug":"loan-default","term":"Loan default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"personal-guarantee","term":"Personal guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}],"related_questions":[{"question":"What specific documentation is required for a lender to prove 'commercially reasonable' disposition of collateral during 7(a) loan liquidation?","url":"https://dealroom.so/for-lenders/questions/what-specific-documentation-is-required-for-a-lender-to-prove-commercially-reasonable-disp"},{"question":"Can a lender accept a \"soft offer\" for collateral in liquidation, or is a formal appraisal always required for disposition?","url":"https://dealroom.so/for-lenders/questions/can-a-lender-accept-a-soft-offer-for-collateral-in-liquidation-or-is-a-formal-appraisal-al"},{"question":"How does business overhead expense insurance differ from key-person life insurance?","url":"https://dealroom.so/sba-7a/questions/how-does-business-overhead-expense-insurance-differ-from-key-person-life-insurance"},{"question":"When a lender is liquidating collateral for a 7(a) loan, what are the specific requirements for proving \"commercially reasonable\" disposition?","url":"https://dealroom.so/for-lenders/questions/when-a-lender-is-liquidating-collateral-for-a-7-a-loan-what-are-the-specific-requirements-"},{"question":"Can a 7(a) lender release a portion of the collateral without prior SBA approval if the remaining collateral is sufficient?","url":"https://dealroom.so/for-lenders/questions/can-a-7-a-lender-release-a-portion-of-the-collateral-without-prior-sba-approval-if-the-rem"},{"question":"When can a 7(a) lender release a portion of the collateral without prior SBA approval if the remaining collateral is sufficient?","url":"https://dealroom.so/for-lenders/questions/when-can-a-7-a-lender-release-a-portion-of-the-collateral-without-prior-sba-approval-if-th"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Collateral Disposition Expense","url":"https://dealroom.so/glossary/collateral-disposition-expense","source_type":"DealRoom Data"}}