{"ok":true,"canonical_url":"https://dealroom.so/glossary/eligible-liquidation-expense","api_url":"https://dealroom.so/api/public/glossary/eligible-liquidation-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":"eligible-liquidation-expense","term":"Eligible Liquidation Expense","group":"Doing the deal","definition":"Costs the SBA allows a lender to incur and claim when liquidating collateral from a defaulted loan. These are typically reasonable and necessary expenses.","what_it_means":"If an SBA loan defaults and collateral is liquidated, only specific, justifiable costs incurred by the lender are covered by the SBA guaranty. As a buyer, you need to understand the potential for these expenses to reduce net recovery, should a worst-case scenario occur.","url":"https://dealroom.so/glossary/eligible-liquidation-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"},{"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":"liquidation","term":"Liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"collateral-disposition-expense","term":"Collateral Disposition Expense","url":"https://dealroom.so/glossary/collateral-disposition-expense"},{"slug":"loan-default","term":"Loan default","url":"https://dealroom.so/glossary/loan-default"},{"slug":"collateral","term":"Collateral","url":"https://dealroom.so/glossary/collateral"}],"related_questions":[{"question":"What specific documentation is required in the Universal Purchase Package (UPP) to support eligible liquidation expenses?","url":"https://dealroom.so/for-lenders/questions/what-specific-documentation-is-required-in-the-universal-purchase-package-upp-to-support-e"},{"question":"How does a lender properly account for eligible liquidation expenses within the Universal Purchase Package (UPP)?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-properly-account-for-eligible-liquidation-expenses-within-the-universal-"},{"question":"How should a lender document eligible liquidation expenses within the UPP for a 7(a) guaranty purchase?","url":"https://dealroom.so/for-lenders/questions/how-should-a-lender-document-eligible-liquidation-expenses-within-the-upp-for-a-7-a-guaran"},{"question":"What is the process for a lender to obtain SBA approval for extraordinary liquidation expenses?","url":"https://dealroom.so/for-lenders/questions/what-is-the-process-for-a-lender-to-obtain-sba-approval-for-extraordinary-liquidation-expe"},{"question":"What specific documentation must a lender include in the Universal Purchase Package (UPP) to justify liquidation expenses?","url":"https://dealroom.so/for-lenders/questions/what-specific-documentation-must-a-lender-include-in-the-universal-purchase-package-upp-to"},{"question":"What documentation is required from a lender to justify liquidation expenses in a Universal Purchase Package (UPP)?","url":"https://dealroom.so/for-lenders/questions/what-documentation-is-required-from-a-lender-to-justify-liquidation-expenses-in-a-universa"}]},"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 — Eligible Liquidation Expense","url":"https://dealroom.so/glossary/eligible-liquidation-expense","source_type":"DealRoom Data"}}