{"ok":true,"canonical_url":"https://dealroom.so/glossary/commercially-reasonable-method","api_url":"https://dealroom.so/api/public/glossary/commercially-reasonable-method","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-method","term":"Commercially reasonable method","group":"Doing the deal","definition":"A standard requiring sensible, prudent actions in line with industry practices, especially when selling collateral. Lenders must follow this during liquidation.","what_it_means":"When an SBA loan defaults and the lender liquidates collateral, they are required to do so in a \"commercially reasonable method.\" This means they can't just dump assets; they must try to get the best possible price under the circumstances. As a buyer, this concept is important to understand what happens if a loan goes bad, ensuring the lender acts responsibly.","url":"https://dealroom.so/glossary/commercially-reasonable-method","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":"orderly-liquidation","term":"Orderly liquidation","url":"https://dealroom.so/glossary/orderly-liquidation"},{"slug":"collateral-disposition","term":"Collateral disposition","url":"https://dealroom.so/glossary/collateral-disposition"},{"slug":"liquidation","term":"Liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"prudent-lending-standards","term":"Prudent lending standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}],"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":"What valuation method is required for an SBA 7(a) acquisition loan over $500,000?","url":"https://dealroom.so/for-lenders/questions/what-valuation-method-is-required-for-an-sba-7-a-acquisition-loan-over-500-000"},{"question":"What is the exact calculation method for the prepayment penalty on an SBA 7(a) loan if paid off early?","url":"https://dealroom.so/sba-7a/questions/what-is-the-exact-calculation-method-for-the-prepayment-penalty-on-an-sba-7-a-loan-if-paid"},{"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"}]},"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 method","url":"https://dealroom.so/glossary/commercially-reasonable-method","source_type":"DealRoom Data"}}