{"ok":true,"canonical_url":"https://dealroom.so/glossary/commercially-reasonable-effort","api_url":"https://dealroom.so/api/public/glossary/commercially-reasonable-effort","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":"commercially-reasonable-effort","term":"Commercially reasonable effort","group":"Doing the deal","definition":"This standard requires a lender to act in a practical, prudent business manner when trying to collect on a defaulted loan. It means they can't just sit on their hands.","what_it_means":"When a loan defaults, the SBA requires lenders to use \"commercially reasonable efforts\" to minimize losses, often by liquidating collateral. As a borrower, this means the lender must take sensible steps to recover funds, but it doesn't prevent them from acting aggressively when necessary.","url":"https://dealroom.so/glossary/commercially-reasonable-effort","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":"loan-default","term":"Loan default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"liquidation","term":"Liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"collection-remedy","term":"Collection remedy","url":"https://dealroom.so/glossary/collection-remedy"},{"slug":"execution-on-asset","term":"Execution on asset","url":"https://dealroom.so/glossary/execution-on-asset"}],"related_questions":[{"question":"What constitutes \"commercially reasonable\" efforts by a lender in liquidating collateral for a defaulted 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-commercially-reasonable-efforts-by-a-lender-in-liquidating-collateral-for"},{"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":"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":"How does the SBA ensure the valuation of goodwill is reasonable for an acquisition loan?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-ensure-the-valuation-of-goodwill-is-reasonable-for-an-acquisition-loan"},{"question":"How does the SBA determine if the purchase price for a business acquisition is reasonable?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-determine-if-the-purchase-price-for-a-business-acquisition-is-reasonable"},{"question":"How does the SBA ensure the purchase price allocation to goodwill is reasonable for an acquisition?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-ensure-the-purchase-price-allocation-to-goodwill-is-reasonable-for-an-acq"}]},"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 — Commercially reasonable effort","url":"https://dealroom.so/glossary/commercially-reasonable-effort","source_type":"DealRoom Data"}}