{"ok":true,"canonical_url":"https://dealroom.so/glossary/estimated-liquidation-cost","api_url":"https://dealroom.so/api/public/glossary/estimated-liquidation-cost","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":"estimated-liquidation-cost","term":"Estimated Liquidation Cost","group":"Doing the deal","definition":"The projected expenses a lender incurs when liquidating collateral to recover a defaulted loan. These costs reduce the net recovery, so lenders factor them into their risk assessment.","what_it_means":"When a loan defaults, the lender will calculate the Estimated Liquidation Cost, which includes legal fees, appraisal costs, marketing, and sales expenses to sell the Collateral. These costs are subtracted from the gross proceeds of a UCC Sale, meaning less money goes towards the outstanding loan balance.","url":"https://dealroom.so/glossary/estimated-liquidation-cost","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":"liquidation","term":"Liquidation","url":"https://dealroom.so/glossary/liquidation"},{"slug":"debt-collection","term":"Debt Collection","url":"https://dealroom.so/glossary/debt-collection"},{"slug":"ucc-sale","term":"UCC Sale","url":"https://dealroom.so/glossary/ucc-sale"},{"slug":"collateral","term":"Collateral","url":"https://dealroom.so/glossary/collateral"}],"related_questions":[{"question":"Can closing costs such as legal and accounting fees be included in the total project cost for the 10% calculation?","url":"https://dealroom.so/sba-7a/questions/can-closing-costs-such-as-legal-and-accounting-fees-be-included-in-the-total-project-cost-"},{"question":"What factors primarily influence the premium cost of business life insurance?","url":"https://dealroom.so/sba-7a/questions/what-factors-primarily-influence-the-premium-cost-of-business-life-insurance"},{"question":"Can an SBA 7(a) loan cover the cost of inventory for a business?","url":"https://dealroom.so/sba-loans/basics/can-an-sba-7-a-loan-cover-the-cost-of-inventory-for-a-business"},{"question":"Can an SBA 7(a) loan cover the cost of a business valuation or appraisal?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-cover-the-cost-of-a-business-valuation-or-appraisal"},{"question":"What percentage of the project cost does the SBA typically expect as a down payment?","url":"https://dealroom.so/sba-loans/basics/what-percentage-of-the-project-cost-does-the-sba-typically-expect-as-a-down-payment"},{"question":"Can an SBA 7(a) loan cover the cost of a franchise transfer fee in an acquisition?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-cover-the-cost-of-a-franchise-transfer-fee-in-an-acquisition"}]},"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 — Estimated Liquidation Cost","url":"https://dealroom.so/glossary/estimated-liquidation-cost","source_type":"DealRoom Data"}}