{"ok":true,"canonical_url":"https://dealroom.so/glossary/collateral-shortfall","api_url":"https://dealroom.so/api/public/glossary/collateral-shortfall","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-shortfall","term":"Collateral shortfall","group":"Doing the deal","definition":"When the business's assets are worth less than the loan. Allowed on 7(a) loans — the lender may take a lien on other assets you own.","what_it_means":"Most small businesses don't have enough tangible assets to fully secure the loan amount — the value is in the goodwill, which can't be sold separately. The SBA allows this collateral shortfall, but the lender may take a lien on other assets you personally own, including your home. This is different from the personal guarantee — it's a specific lien on property, not just a promise to pay. Ask your lender early what additional collateral they'll require so there are no surprises at closing.","url":"https://dealroom.so/glossary/collateral-shortfall","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"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"ucc-lien","term":"UCC lien","url":"https://dealroom.so/glossary/ucc-lien"},{"slug":"personal-guarantee","term":"Personal guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"life-insurance-assignment","term":"Life insurance assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"goodwill","term":"Goodwill","url":"https://dealroom.so/glossary/goodwill"}],"related_questions":[{"question":"When is personal real estate required as additional collateral for a 7(a) loan with a business asset shortfall?","url":"https://dealroom.so/for-lenders/questions/when-is-personal-real-estate-required-as-additional-collateral-for-a-7-a-loan-with-a-busin"},{"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"},{"question":"Can cash in the business bank account count as collateral?","url":"https://dealroom.so/sba-loans/basics/can-cash-in-the-business-bank-account-count-as-collateral"},{"question":"What happens if my business does not have enough collateral?","url":"https://dealroom.so/sba-loans/basics/what-happens-if-my-business-does-not-have-enough-collateral"},{"question":"Can my business's accounts receivable be used as collateral?","url":"https://dealroom.so/sba-loans/basics/can-my-business-s-accounts-receivable-be-used-as-collateral"}]},"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 shortfall","url":"https://dealroom.so/glossary/collateral-shortfall","source_type":"DealRoom Data"}}